Tokyo's Nikkei share average edged up 0.06 percent on Thursday to its highest close in four years, as demand for high-tech firms such as Tokyo Electron Ltd limited disappointment after weak machinery orders.
Insurers lost ground after a brokerage lowered its rating on the sector, but Yahoo Japan Corp surged after a report raised speculation it would join forces with a broadcaster.
Fanuc Ltd and other machinery-related stocks slipped after the release of the figures, which showed that Japan's machinery orders fell 10.0 percent in September from the previous month, a bigger drop than the forecast 7.0 percent.
The orders are watched as a key gauge of capital spending.
Fanuc, a maker of industrial robots, finished down 0.5 percent at 9,300 yen. It was fetching around 9,440 yen before the figures were released.
The Nikkei inched up 8.68 points to 14,080.88, its highest close since May 22, 2001. It dipped as low as 13,981.99 after the data was released at 2 pm (0500 GMT).
The broader TOPIX index finished down 0.20 percent at 1,484.68, falling for a third time since hitting a five-year closing high on Monday.
Yoshinori Nagano, chief strategist at Daiwa Asset Management, said investors have grown accustomed to seeing widely differing figures from the machinery orders each month.
"The data is very volatile. So at this level - while a little worse than expected - I don't think it is enough to surprise investors," he said.
Last month, core machinery orders rose 8.2 percent on a monthly basis, underscoring the strength of Japan's economic recovery.
Tokyo Electron, the world's second-largest maker of tools used to make microchips, advanced 2.1 percent to 6,270 yen.
On Wednesday the company said its first-half profit surged from a year earlier, when an accounting change had hit earnings, and said chip-equipment demand was recovering.
Olympus Corp gained 4.6 percent to 2,760 yen after it said it would move the focus of its digital camera business to high-end single lens reflex cameras, instead of compact models. Earlier it hit 2,775 yen, its highest level since September 2003.
Millea Holdings Inc, Japan's largest nonlife insurer, lost 4.6 percent to 2.06 million yen.
Other nonlife insurers also fell after Goldman Sachs lowered its rating on the sector to "neutral" from "attractive", and said stock prices had limited room to advance after recent gains.
The insurance sector subindex IINSU.lost 2.7 percent, becoming the second-biggest percentage loser on the Tokyo Exchange's first section.
Yahoo, Japan's biggest Internet portal, rose 7.6 percent to 128,000 yen. The Asahi Shimbun newspaper reported on Thursday that the company's president said he might consider a tie-up with Tokyo Broadcasting System Inc (TBS) if the broadcaster proposed a merger with Yahoo. Internet company Rakuten Inc has proposed a merger with TBS, which has so far resisted Rakuten's advances.
TBS's shares were unchanged at 3,270 yen. Rakuten closed 3.1 percent higher at 76,500 yen.