Japan's Nikkei average fell for a fifth day to hit a five-week closing low on Thursday, with better-than-expected machinery orders data unable to offset investor concerns over US corporate earnings and a weekend election in Japan.
It is the Nikkei's longest losing streak since early May, when it fell for six straight sessions.
Telecoms and Internet stocks such as Yahoo Japan Corp and Softbank Corp led the market lower after a weak sales forecast by US Internet giant Yahoo Inc raised fears over the sector's outlook. The Nikkei closed down 62.63 points or 0.55 percent at 11,322.23, its lowest close since June 4 and adding to a 512 point fall in the previous four sessions.
The broader TOPIX index lost 0.43 percent to 1,135.00, also the lowest close since June 4.
Analysts said a weak showing by the ruling Liberal Democratic Party in the election for the Japanese parliament's upper house on July 11 could threaten Prime Minister Junichiro Koizumi and undermine his capacity to push through reforms.
Foreign investors, in particular, have applauded Koizumi's reforms in Japan's fragile banking sector, and have been the main power behind the Nikkei's over 50 percent rally from a two-decade trough logged in April last year. Trade slowed, with about 959 million shares changing hands on the first section, down from 1.124 billion on Wednesday.
Decliners outnumbered gainers 879 to 518. Government data on Thursday showed that core private-sector machinery orders fell 2.1 percent in May from April, compared with the median forecast of a 3.8 percent decline in a Reuters poll. Although the data, a key gauge of trends in capital spending, underscored views that Japan's recovery is firmly under way, it failed to improve market sentiment.
Worries about the health of US corporate earnings in the quarters ahead were highlighted after Yahoo Inc's sales forecast failed to satisfy investors and its shares fell sharply in after-hours trade.
Yahoo Japan, owned 33.5 percent by Yahoo Inc, fell 3.78 percent to 943,000 yen. Internet service provider Softbank fell 4.75 percent to 4,210 yen.
A series of profit warnings for the latest quarter from US software makers including PeopleSoft Inc this week put a damper on their Japanese peers.
Software developer Fuji Soft ABC slumped 4.39 percent to 3,920 yen and Obic Business Consultants Co Ltd, a business-use package software maker, skidded 4.39 percent to 7,620 yen.
Investors also avoided brokers, banks and technology stocks as falls in the Nasdaq 100 futures on Globex suggested a weaker opening on Wall Street later in the day.
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