Japan's Nikkei average gained 0.5 percent on Wednesday, inching back towards a six-month closing high struck earlier in the week, with Olympus Corp soaring after it forecast a return to profit this financial year. Shares in Nissan jumped after it projected a narrower loss than expected but Hitachi, Japan's biggest electronics maker, plunged after it delivered a bleak forecast for another year of losses.
Market sentiment found support from data showing the pace of Chinese retail growth accelerated in April, helping to compensate for weakness in the industrial sector. "The market was buoyed by short covering. Steady Asian stock markets in light of fair economic indicators from China, and the yen coming off intraday highs against the dollar helped it move higher," said Yumi Nishimura, a manager at Daiwa Securities SMBC.
In choppy trade, the benchmark Nikkei gained 41.88 points to 9,340.49. The index lost 1.6 percent on Tuesday after reaching a six-month closing high of 9,451.98 on Monday.
"A sense of accomplishment still lingers after the Nikkei rose above 9,500 at the start of the week. The market is still trying to hold ground while absorbing profit-taking," Nishimura said. The broader Topix rose 0.4 percent to 888.75. Shares of firms seen as relatively immune to economic cycles drew demand as investors moved away from exporters that had gained sharply.
"Investors are probably shifting money to defensive stocks and taking profits in those sensitive to the health of the global economy such as exporters and financials as they have recovered sharply," said Masaru Hamasaki, a senior strategist at Toyota Asset Management.
"There isn't much room for further gains for those stocks unless some very strong data comes out, as positive news surrounding the financial sector has been factored in." Among defensive stocks, Astellas Pharma rose 2.1 percent to 3,400 yen and Takeda Pharmaceutical climbed 2.1 percent to 3,810 yen.
Olympus, a pioneer of lightweight SLR cameras, jumped 12.8 percent to 1,943 yen, becoming one of the top contributors to the Nikkei 225 index after it beat analysts' expectations by forecasting a return to profit. It said it expected to make a net profit of 40 billion yen ($410 million) for the year to March, compared with a consensus forecast of a loss of 9.84 billion yen from 12 analysts polled by Thomson Reuters.
Nissan shares surged 6.3 percent to 542 yen after the automaker projected a smaller-than-expected operating loss for the year to next March. Hitachi slid 10.8 percent to 340 yen after forecasting a far deeper loss than expected in its fourth straight year in the red, as it struggles with a slump in the chip, automotive and electronics sectors. It was the biggest percentage loser among Nikkei 225 components.
Exporters fell as investors fretted over a stronger yen, which curbs exporters' profits when they are repatriated. The dollar dipped below 96 yen before recovering to stand at 96.50 yen, little changed on the day. Toyota Motor Corp, the world's biggest automaker, shed 2.1 percent to 3,660 yen, while Honda Motor Co slid 1.2 percent to 2,825 yen.
Shipping firm Mitsui O.S.K. Lines fell 4.3 percent to 619 yen after Nomura Securities downgraded the stock to "neutral" from "buy" and lowered its target price, citing weakness in its car transport and other businesses. Trade slowed on the Tokyo exchange's first section, with 2.4 billion shares changing hands, compared with last week's daily average of 3 billion. Advancing stocks outnumbered declining ones, 937 to 623.