Tokyo stocks closed down 0.42 percent Wednesday with investors locking in profits following recent highs. The benchmark Nikkei 225 index, which rose to a six-month high earlier in the week, lost 65.61 points to 15,449.63, while the Topix index of all first-section shares was down 0.47 percent, or 5.94 points, to 1,247.08.
"Foreign investor trading is drying up ahead of the Thursday US Thanksgiving holiday, taking the steam out of the market," said Hideyuki Ishiguro, strategist at Okasan Securities.
Markets appeared largely unfazed by news that two US B-52 bombers flew over a disputed area of the East China Sea without telling Beijing, in a challenge to China's bid to create an expanded air defence identification zone.
Despite rising regional tensions, investors remained focused on US consumer confidence tumbling in November to its lowest level since April.
That result indicated that an agreement in Washington to avert a debt default did not significantly reassure people, while the Federal Reserve will bear the figures in mind when deciding a timeline to wind down its stimulus programme.
In Tokyo share trading, Internet retailer Rakuten jumped 6.41 percent to a record high 1,527 yen after news that the Tokyo Stock Exchange had approved the firm's application to move to the Topix index from the Jasdaq start-up market.
Rakuten's shift to the major board "will bring a lot of passive buyers to its stock that might have previously overlooked it," a trader said.
Panasonic jumped 3.45 percent to 1,167 yen after the Nikkei economic daily reported the electronics giant was nearing a deal to sell three unprofitable domestic semiconductor plants to an Israeli firm TowerJazz.
Nippon Steel fell 0.90 percent to 328 yen after media reports that it and ArcelorMittal are close to a $2.0 billion deal to buy a US steel plant from ThyssenKrupp of Germany.
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