TOKYO: Japanese shares closed lower on Wednesday, with the Nikkei retreating from a more than 29-year closing high notched a day earlier, as soaring Covid-19 cases in Tokyo halted a recent equity rally fuelled by vaccine optimism.

The benchmark Nikkei share average dropped 1.1% to 25,728.14, its biggest daily loss since Oct. 30.

The index, which has gained nearly 12% so far this month, posted its highest close since 1991 on Tuesday.

The broader Topix lost 0.81% to 1,720.65.

Both of the indexes extended their losses in the afternoon as market sentiment soured after local media reported that Tokyo hit a new single-day record of 493 coronavirus infections on Wednesday.

Earlier in the day, the Nikkei business daily reported that Tokyo was preparing to raise its Covid-19 alert level to the highest of four levels.

SoftBank Group Corp inched down 0.91%, mirroring the Nasdaq’s weak performance overnight.

Separately, the company’s chief executive officer, Masayoshi Son, said at the New York Times-hosted DealBook Online Summit that he was sitting on about $80 billion in cash for investments and share buybacks.

The Mothers Index of start-up firm shares bucked the overall sombre mood, closing 0.62% higher.—Reuters