The Nikkei average gave up its opening gains to fall 0.81 percent on Wednesday as caution set in and trade narrowed ahead of earnings reports from major companies including Matsushita Electric Industrial Co Ltd.
Shares in Sharp Corp, the world's No 2 liquid crystal display TV maker, reversed course and declined after the company on Tuesday reported a 14 percent rise in quarterly profit, which was not enough to surprise investors.
In a quarterly report which looked even more upbeat, consumer electronics maker Matsushita said after the market closed that its April-June profit jumped 41.5 percent, boosted by strong demand for its plasma TVs, and it raised its half-year forecast.
But Hiroshi Arano, adviser at Dai-Ichi Kangyo Asset Management, said he saw little positive effect from Matsushita on other shares amid the dearth of investor appetite, which was reflected in a downtrend in bourse turnover in the past month.
The Nikkei fell 121.17 points to 14,884.07 after breaking above the 15,000 mark on Tuesday for the first time in a little over one week. Soon after the open the index had risen as high as 15,108.14.
The TOPIX index was down 0.94 percent at 1,520.44. Shares in Sharp declined 1.4 percent to 1,865 yen. The shares had risen nearly 14 percent in the previous four sessions on expectations of strong earnings. Prior to its earnings announcement, Matsushita, the maker of Panasonic products, fell 0.4 percent to 2,315 yen. The stock had added 11.5 percent in a five-day rising run.
Trade volume edged down for the second straight session, which market analysts said was partly due to unattractive share valuations. In the auto sector, Japan's No 3 Honda Motor Co after the market closed posted a 30 percent jump in quarterly net profit, fuelled by strong North American sales, and kept its full-year profit forecast.
Shares in Honda gained 0.5 percent to 3,770 yen during the day. Those of No 1 Toyota Motor Corp lost 1 percent to 5,910 yen ahead of its April-June report next week. In contrast, second-ranked Nissan Motor Co Ltd climbed 3.5 percent to 1,221 yen on the view that its quarterly earnings, announced on Tuesday, were not as poor as some analysts had previously thought. Among other decliners, Yahoo Japan Corp, Japan's top Internet portal, sank 7.6 percent to 46,200 yen on concerns of tough competition.
The Japan unit of Amazon.com Inc said on Wednesday it was considering launching a virtual shopping mall on its Web site to attract more shoppers by offering a wider variety of products. Shares of consumer lenders declined, hit by lower earnings at industry leader Aiful Corp, announced on Tuesday, and a downgrade by Nikko Citigroup on Aiful and three other rivals. Shares in Aiful slid 7.6 percent to 4,230 yen. A total of 1.42 billion shares changed hands on the Tokyo exchange's first section, well below last week's daily average of 1.73 billion shares.
Decliners beat advancers by a ratio of four to one.
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