Stocks dropped slightly Friday, pressured by profit-taking amid a sense of market overheating.
The Nikkei 225 average closed down 9.81 points at 14,732.61. The broader Topix shed 4.11 points to end at 1,214.87.
The TSE was closed Monday for a national holiday.
Stocks slipped as traders kicked off the week after the Dow Jones industrial average extended its losing streak to a third session Monday and as the yen firmed against the dollar.
Selling to cash in gains was an additional factor weighing down share prices amid a sense of market overheating following last week’s surge.
The market’s downside was underpinned, however, by buying on dips and to secure rights to midterm dividends before Wednesday’s final trading day for settlements in the first half of fiscal 2013.
Expectations also grew for economic recovery in China and Europe based on strong readings Monday of the HSBC China manufacturing purchasing manager’s index and the eurozone purchasing manager’s index, both for September.
“In addition to buying to secure dividends, I believe futures-led speculative purchases bolstered stock prices in afternoon trading,” said Ryuta Otsuka at Toyo Securities Co.
For the rest of the week, “stocks are likely to move in a confined range, as investors are waiting to see the government’s final decision in October on whether to raise the consumption tax and unveil its economic stimulus package,” Otsuka added.
Rising issues slightly outpaced falling ones 847 to 807 in the first section.
Volume decreased to 2.833 billion shares from Friday’s level of 3.447 billion. Automakers Toyota and Honda slumped, along with electronics giant Sony and camera maker Canon.
JGBs rise on Fed remarks
Japanese government bonds bounced back Tuesday, supported by comments by key Federal Reserve officials showing the need for the U.S. central bank to continue its quantitative easing policy.
In futures trading on the Tokyo Stock Exchange, the lead December contract on 10-year JGBs closed up 0.25 point from Friday at 144.11. Volume fell to 18,335 contracts from 18,863.
In late interdealer trading in cash JGBs, the yield on the latest 330th 10-year issue with a 0.8 percent coupon stood at 0.670 percent, down from 0.690 percent late Friday.