TOKYO: Japanese shares fell on Friday, tracking Wall Street’s declines overnight after hotter-than-expected US inflation data fuelled bets for a more hawkish Federal Reserve.

However, losses on Japan’s benchmark Nikkei share average were limited by a 5.6% surge for heavily weighted Fast Retailing, the owner of the Uniqlo brand, following a strong earnings report.

Chip-related stocks also rose, supported by gains for US peers against the grain of the broader Wall Street sell-off.

The Nikkei fell 0.42% to 32,356.76 by the midday recess, threatening to snap a three-day winning run.

The index was spared steeper losses by rallies for its most heavily weighted stocks, which also included chip-making equipment maker Tokyo Electron and chip-testing machinery manufacturer Advantest, which rose 1.2% and 0.5%, respectively.

Of the Nikkei’s 225 components, only 20 were higher, with 203 falling and two flat.

The broader Topix index slumped 1.23%. “Overall, stocks are being sold off,” said Nomura Securities strategist Maki Sawada. However, the run-up in Japanese equities this week and the approaching weekend are likely exacerbating declines, she said.

“It’s an environment that’s ripe for profit-taking,” she said.

Japan’s Nikkei jumps, led by rally in chip shares

Even with the gains for Fast Retailing and chip stocks, every sector on the Nikkei was down, led by real estate.

Offsetting Fast Retailing’s gains among retailers, Seven & i Holdings - the operator of the 7-Eleven convenience store chain in Japan - led losses among Nikkei constituents with a more than 5% slump after releasing its own financial results.

Although profit was in line with forecasts, “the lack of a buyback was a slight disappointment,” Jefferies analyst Shunsuke Kuriyama wrote in a research note.

There were several noteworthy decliners among tech shares too.

Online services companies Rakuten Group and Recruit Holdings fell 3.8% and 3.2%, respectively. Nintendo dropped 2.8%.