Tokyo's Nikkei average gave up 0.17 percent by the close on Thursday as techs such as Hitachi Ltd followed their US rivals lower after investment bank Goldman Sachs noted a slowdown in technology spending.
But buying by two newly launched investment trusts, with total assets under management of 52 billion yen ($472.5 million), was detected on select blue-chip stocks, providing a cushion to the market's overall losses, analysts said.
The Nikkei lost 19.22 points to 11,139.36, a hair above Friday's close when Japan surprised market participants with a downward revision to its April-June gross domestic product (GDP) figure.
The broader TOPIX index hit a three-week closing low of 1,122.01, down 0.57 percent, as large-cap issues, such as top banks and telecoms giant Nippon Telegraph and Telephone Corp (NTT), extended losses. Yet, the TOPIX remained 3.4 percent above its August trough in the aftermath of the preliminary GDP figure, which was far weaker than expected.
"The market is forming a plateau, with investors gradually holding back ahead of next week's FOMC and its impact on the US financial markets," said Zenshiro Mizuno, senior managing director at Marusan Securities.
Consensus is growing for another rise in US interest rates of a quarter percentage point at the US central bank's Federal Open Market Committee (FOMC) meeting on Sept 21. Trading slowed with 1.212 billion shares changing hands, the lowest daily total since Sept. 1, and compared with 1.619 billion shares on Wednesday. Decliners outnumbered gainers 1,088 to 367.
Despite the Nikkei hovering within a limited 11,000-11,300 range in the past three weeks, many investors stayed optimistic about a number of sectors, including steel, materials, shipping and shipbuilding, given growing signs of an improvement in their earnings.
Nippon Steel Corp., Japan's biggest steel maker, added 0.4 percent to 251 yen after quickly reversing its fall in the morning to 243 yen.
Among technology stocks, Hitachi, Japan's biggest electronics conglomerate, dipped 0.29 percent to 687 yen even after the company said on Wednesday it would pay a dividend of 5.5 yen for the six months to September, up 2.5 yen from a year earlier. Hitachi hit a two-month closing high of 719 yen on Monday.
Canon Inc dropped 2.08 percent to 5,170 yen despite a newspaper report that Japan's biggest office equipment maker is likely to post a 17 percent year-on-year rise in operating profit in 2004, exceeding the company's previous forecast.
NTT, Japan's biggest telecoms company, slid 2.4 percent to 447,000 yen after the company said it was considering price cuts for its fixed line phone service. NTT rivals KDDI Corp. and Internet service provider Softbank Corp. have said they would begin offering discount fixed-line services.
KDDI, which on Wednesday announced a plan to launch a cut-rate Internet-based fixed-line phone service in February, climbed 2.82 percent to 546,000 yen.
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