Tokyo's Nikkei average fell 1.21 percent on Wednesday as investors took a breather after the market's recent rises and sold shares of gainers including tech issues such as Canon Inc.
Also weighing down the market was a fall in telecom issues after KDDI Corp, Japan's second-largest phone operator, fired the latest shot in a price war by saying it would launch a cut-rate fixed-line telephone service in February.
The Nikkei closed at its low for the day of 11,158.58, down 137.00 points from the previous close. It had gained 212 points in the previous two sessions.
But the Nikkei's Wednesday close was still 4.4 percent above its August trough in the aftermath of surprising weakness in preliminary April-June gross domestic product (GDP) data.
The broader TOPIX index shed 1.16 percent to 1,128.43.
Investors sold high-tech shares despite another day of gains in the US tech-laden Nasdaq market.
Analysts said a rise in crude oil prices to a high of $44.79 per barrel during Asian trading hours and concerns about a deterioration in global demand for semiconductors and electronics parts encouraged investors to grab profits from the sector.
Trade volume edged down, with 1.619 billion shares changing hands on the first section, down from 1.632 billion on Tuesday.
Decliners outnumbered gainers 1,233 to 270.
Higher oil prices generally weigh on the US economy, the world's biggest energy consumer and Japan's main trade partner, because of the impact on companies' profit margins and consumer spending attitudes.
Toyota Motor Corp, the world's second-biggest auto maker, fell 1.17 percent to 4,230 yen despite Wednesday's news that it will start building its Prius hybrid sedans in China next year with FAW Group in a step it hopes will promote the vehicles as the global standard for fuel-efficient cars.
Among tech issues, Japan's biggest maker of office machines, Canon, which on Tuesday announced a joint venture with Toshiba Corp to produce advanced flat panel displays, was down 0.94 percent at 5,280 yen.
Toshiba, Japan's second-biggest electronics conglomerate, gave up 1.65 percent to 416 yen.
Chip-making equipment maker Tokyo Electron Ltd fell 2.21 percent to 5,750 yen after hitting a 10-week closing high in the previous session.
Nippon Telegraph and Telephone Corp (NTT), Japan's biggest telecoms company, lost 1.08 percent to 458,000 yen after hitting a 10-month intraday low of 454,000 yen.
KDDI said on Wednesday afternoon that its new service would include a basic charge of 1,500 yen ($13.69) a month, 250 yen less than NTT's rate and 50 yen below that of Softbank Corp. The figure had been reported by a newspaper this month.
Shares of KDDI were down 1.3 percent at 531,000 yen. Those of Softbank, which has said it will begin offering a fixed-line phone service in December that will undercut NTT, lost 2.31 percent to 4,660 yen.