Japan's Nikkei stock average ended down on Tuesday to snap a four-day winning streak, as investors turned wary of a strong yen and recent gains in the market and took profits on Toyota Motor Corp and other exporters.
Bank and shipping shares also came under profit-taking pressure as the Nikkei closed 0.10 percent lower at 10,813.99 after testing 11,000, a level last reached in late October.
"From a technical point of view, the market seems to have gone too far," said Masaru Ueda, head of investment strategy at Marusan Securities.
Ueda said the Nikkei stood nearly five percent above its 25-day moving average of 10,324.75, a sign of overheating. Also worrying was the increasing number of advancers, he added.
The Nikkei gained 4.4 percent, or 460 points, between December 26 and January 5, raising concerns among investors that the market may have gone overboard.
The broader TOPIX index lost 0.33 percent to 1,055.50 on Tuesday. The dollar was trading at around 106.20 yen, near Monday's three-year low of 106.06. Investors saw the strong yen as a reason to take profits on Toyota shares, which rose more than four percent on Monday.
Toyota skidded 1.32 percent to 3,730 yen, while its peer Honda Motor Co fell 2.46 percent to 4,750 yen.
Recent high-flyers like banks and shipping firms were hit and Mizuho Financial, Japan's largest banking group, gave up 3.33 percent to 319,000. UFJ Holdings Inc, the smallest of Japan's four megabanks, sagged 1.71 percent to 517,000 yen.
Shipping companies, which had lured buyers because of their growth prospects due to booming demand in China, took a beating as selling pressure mounted in the overall market.
Nippon Yusen KK fell 2.89 percent to 470 yen and Kawasaki Kisen Kaisha Ltd lost 1.31 percent to 528 yen.
Investors flocked to defensive stocks such as pharmaceuticals and gas companies.
Sankyo Co Ltd jumped 5.65 percent to 2,150 and Takeda Chemical Industries Ltd rose 2.31 percent to 4,420.
Tokyo Electric Power Co tacked on 1.06 percent to 2,380 and Osaka Gas Co edged up 0.34 percent to 293.
Traders said other winners included oil shares, with Cosmo Oil Co rising 3.62 percent to 229 yen, as crude prices have increased due to forecasts of colder US weather.
Decliners outnumbered gainers 768 to 640. Trading volume rose to 1.417 billion shares on the first section, the highest since December 12.
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