Tokyo's Nikkei average ended down 0.59 percent on Tuesday as concern about the strong yen put a brake on recent gains in high-tech exporters such as Kyocera Corp, although confidence in Japan's economic outlook helped banks and insurers. The Nikkei finished down 65.82 points at 11,161.75 after rising 3.5 percent in the previous two sessions and hitting a five-week closing high on Monday. The broader TOPIX index lost 0.28 percent to 1,120.37.
Analysts said a 3 percent fall in copper futures in Shanghai weighed on some steel firms and others with business linked to China, although the overall impact on the market was limited.
In mid-October a similar fall in copper prices had stoked concern about China's economic growth and triggered selling in Japanese companies that do a lot of business with China.
Takahiko Murai, general manager of equities at Nozomi Securities, said the fall in copper prices this time had little to do with economic fundamentals.
"Commodities prices, except for gold, now basically follow oil prices, which are on a downturn after hitting record highs (last month)," he said.
Analysts said the Tokyo market had become more resilient to external factors, given receding fears about the global economy after the fall in oil prices and after Wall Street's preferred candidate, George W. Bush, was re-elected president.
"As investor focus returned to corporate earnings, valuations in shares of Japan's top manufacturers looked attractive from a historical point of view. So, buyers returned to these stocks in the past few weeks," said Hitoshi Yamamoto, head of Commerz International Capital Management.
Kyocera, the world's biggest maker of ceramic casings for semiconductors, dropped 2.37 percent to 7,420 yen after jumping 3.8 percent in the previous two sessions.
Japan's biggest office equipment maker, Canon Inc, which generates three-quarters of its sales from abroad, was down 0.73 percent at 5,430 yen.
Analysts said, however, that many investors remained confident about Japan's long-term economic outlook after the market shrugged off weaker-than-expected gross domestic product figures and bet on a swift recovery in the Japanese economy.
Mizuho Financial Group Inc, Japan's biggest banking group by assets, rose 1.35 percent to 449,000 yen, extending gains into a third day.
Millea Holdings Inc, Japan's biggest casualty insurance company, climbed 2.58 percent to 1.59 million yen.
A notable gainer was Mitsui Mining Co Ltd, which soared 16.16 percent to 381 yen after the Nihon Keizai Shimbun business daily said that International Steel Group Inc Chairman Wilbur Ross was interested in buying the ailing resource company to secure a stable supply of coke.
Steel firms around the world are scrambling to strengthen their ties with mining and other natural resources firms to secure raw materials amid tight supply.
Nippon Steel Corp, Japan's biggest steel maker, dropped 0.79 percent to 251 yen and rival JFE Holdings was down 1.91 percent at 2,825 yen.
Trading was moderately active with 1.355 billion shares changing hands, down slightly from 1.394 billion on Monday. Decliners outnumbered gainers 983 to 471.