Tokyo stocks ended 0.22 percent higher Wednesday as profit-taking held back further gains after the previous day saw the Japanese market post its best finish in two months. The benchmark Nikkei 225 index added 33.71 points to close at 15,067.96, its third positive session in a row, while the Topix index of all first-section shares rose 0.44 percent, or 5.36 points, to 1,233.95.
The headline index traded within a narrow band, zigzagging between positive and negative territory following a weak lead from Wall Street. Investors locked in profits after the Tokyo market finished Tuesday above 15,000 for the first time since early April thanks to a weaker yen and hopes for Prime Minister Shinzo Abe's economic reform package.
Abe is expected to announce a new slate of policies in June to stoke growth in the world's third largest economy, while the Japanese public pension fund is widely expected to boost the portion of stocks in its huge portfolio - a plus for the Tokyo market. "Since last year's Abe policy speech in June sparked a steep market sell-off, event-driven hedge funds are looking to load up on this one as well to short the market," an equity trading director at a European brokerage told Dow Jones Newswires. "Thus for the time being, the current Nikkei rally could be nearly over after a 1,000 point rise in just a few weeks."
However, Capital Economics said the Nikkei index was still attractive with the weaker yen, possible corporate tax cuts, and speculation over further monetary easing measures by the Bank of Japan later this year supporting the market. US stocks Tuesday eased off from the previous day's records as investors look ahead to a European Central Bank meeting and Friday's US jobs report for May.
In share trading, Dai-ichi Life Insurance rose 3.59 percent to 1,499 yen after it said it would buy US-based Protective Life for $5.7 billion in a record deal. Mobile carrier SoftBank advanced 2.28 percent to end at 7,792 yen, Sony gained 1.09 percent to 1,661 yen and Canon added 0.29 percent to close at 3,375 yen. Toyota was flat, slipping 0.01 percent to 5,854 yen.