Stocks fell Wednesday ahead of closely watched events overseas later in the week.
The Nikkei 225 average closed down 201.50 points at 13,668.32. On Tuesday, the key market gauge soared 208.69 points to snap a four-session losing streak.
The Topix dropped 16.83 points to end at 1,131.70 after climbing 20.08 points Tuesday.
The Nikkei opened on a weak note and briefly lost about 225 points in early trading, dragged down by selling of export-oriented issues.
After the selling ran its course, the Nikkei gradually trimmed the losses as the yen fell slightly from early highs against the dollar and the euro.
But the stock market came under selling pressure again toward the close, led by declines in index futures.
Some market players moved to lock in profits before the announcement later Wednesday of the outcome of the U.S. Federal Reserve’s two-day policy-setting meeting and key U.S. economic indicators, including preliminary gross domestic product data for April-June, brokers said.
Investors were expected to focus in particular on a Fed statement to be released after the Federal Open Market Committee meeting to judge whether the U.S. central bank could possibly start scaling back its quantitative easing in September and to confirm whether the Fed will set higher hurdles for ending its effective zero interest rate policy, some market sources said.
Kenichi Hirano, adviser and market analyst at Tachibana Securities Co., said Wall Street’s reaction to the Fed statement could affect the TSE.
Nothing that Japanese firms’ April-June earnings reports have so far failed to help set a direction for the stock market, trading has not been active as a whole, Hirano said.
Falling issues overwhelmed rising ones 1,414 to 270 on the first section, while 69 issues were unchanged. Volume totaled 2.590 billion shares, compared with 2.579 billion Tuesday.
Power utility Tokyo Electric tumbled 5.67 percent. Chubu Electric and Kansai Electric declined sharply.
JGB stuck in tight band
Japanese government bond futures ended flat Wednesday amid a lack of fresh trading clues.
The lead September contract on 10-year JGBs finished at 143.62, unchanged from Tuesday.
Turnover grew to 16,937 contracts from 13,274.