Japan's Nikkei average fell 1.1 percent on Thursday, its first negative day in three, as financials such as Mitsubishi UFJ Financial Group and other recent gainers were sold after a tumble on Wall Street. The index's fall accelerated briefly in the final hour of trade after Softbank Corp plunged on a media report it might issue higher dividend preferred shares.
Losses in Japan's third-largest wireless carrier were later pared, ending down 3.3 percent. "Today's fall should not be a surprise," said Fumiyuki Nakanishi, group manager of the investment research department at SMBC Friend Securities. "A direct trigger was the fall on Wall Street, but a pause had been on the cards after the Tokyo market's recent gain." The benchmark Nikkei has gained 19.6 percent from the recent bottom touched on March 17. Behind the recent recovery was foreign investors, who were net buyers of Japanese stocks for four straight weeks ending on April 25.
"The situation is different from a month ago," said Masashi Wakabayashi, general manager of the trading department at Meiji Dresdner Asset Management. "I don't feel the market has hit the ceiling yet. But rising prices of oil and commodities could put a hold on its upward move if investors start to worry that the negative impact on corporate earnings might be bigger than expected," he said.
The benchmark Nikkei average fell 159.22 points to 13,943.26, a day after booking its highest close in four months. The broader TOPIX index shed 1.5 percent to 1,372.95. After the close, Toyota Motor Corp posted a 28 percent fall in quarterly net profit on a stronger yen and finance-related losses, and forecast a larger fall than expected in annual profit for its first decline in seven years as the US auto market slows.
"The earnings forecast figures are negative for Toyota's share price, likely causing it to give up gains made in its recent rebound," said Tatsuo Yoshida, analyst at UBS Securities.
Before the results, Toyota had ended the day down 1.8 percent at 5,480 yen. Investors sold financial shares after a recent rally in the sector and after their US peers fell following a warning from a top Federal Reserve official that the central bank must be ready to raise interest rates to curb inflation.
Top lender Mitsubishi UFJ slid 3.7 percent to 1,117 yen and the No 2, Mizuho Financial Group, fell 5.2 percent to 525,000 yen. Mitsubishi UFJ had risen 47 percent from the recent bottom on March 17 to a five-month closing high on Wednesday. Mizuho had gained 51 percent over the same period.
Property firms, also recent gainers, fell. Mitsubishi Estate Co Ltd shed 3.7 percent to 2,890 yen and Sumitomo Realty & Development Co Ltd lost 3 percent to 2,710 yen. Softbank ended at 2,040 yen after falling as far as 1,943 yen. Trade was moderate, with 1.88 billion shares changing hands, compared with last week's daily average of 1.9 billion. Declining shares beat advancing ones by 846 to 744.
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