Japans Nikkei average slipped 0.6 percent on Thursday, giving up early gains as a stronger yen hit Honda Motor Co and other exporters, while investors locked in profits from a sharp rally in the past week. Tokyo stocks started Thursday firmly, following the lead of US stocks after the US Federal Reserve decided to buy long-dated government bonds, with financials such as Mizuho Financial Group rising.
But the Nikkei drifted to the negative territory as investors booked profits ahead of a three-day weekend in Japan, starting on Friday. The benchmark Nikkei fell 49.28 points to 7,922.89 after briefly rising above 8,000 this week. The Nikkei posted a five-week closing high of 7,972.17 the previous day, having recovered almost 11 percent from a 26-year closing low near 7,000 last week. The broader Topix fell 0.1 percent to 763.77.
The dollar fell 0.2 percent against the yen to 95.98 yen, extending the previous days slide after the Fed engineered a sharp fall in US bond yields with its vastly expanded plans to buy assets. A stronger yen prompted investors to dump exporters as it deflates Japanese firms overseas profits when repatriated.
But market participants were not worried about the downside risk despite the fact that the Nikkei failed to hold gains that briefly took it above 8,000. The Bank of Japan is also boosting its buying of government bonds, in its latest move to ease credit crisis, and this benefited bank shares.
Japans top lender Mitsubishi UFJ Financial Group rose 2.1 percent to 488 yen, while No 2 Mizuho Financial Group gained 1.9 percent to 210 yen. Sumitomo Mitsui Financial Group, the third-ranked bank, climbed 2.7 percent to 3,450 yen. Honda Motor fell 3.5 percent to 2,220 yen on the rise in the yen, and as Moodys Investors Service downgraded to A1 from Aa3 its long-term credit rating.
Panasonic Corp, the worlds No 1 plasma TV maker and a big exporter, slid 2.7 percent to 1,111 yen, while Japanese electronics conglomerate Fujitsu Ltd dropped 6.5 percent to 348 yen. Advantest, the worlds biggest supplier of machines that test semiconductors, fell 3.4 percent to 1,432 yen after the book-to-bill ratio of Japanese chip-making equipment fell to a record low of 0.35 in February.
But Toshiba shares gained 0.8 percent to 260 yen after the company said it has tapped Norio Sasaki as its new chief executive, entrusting the experienced head of its power division with a $3 billion cost-cutting plan as the electronics giant heads for a record loss. Trade was light on the Tokyo exchanges first section, with 876 million shares changing hands, compared with last weeks morning average of 1 billion.Advancing stocks outnumbered declining ones, 804 to 735.