Tokyo stocks erased early gains to end lower Thursday, dragged down by sharp losses in shippers and pharmaceuticals as initial buying of exporters on confidence about a global economic recovery ran out of steam.
The 225-issue Nikkei Stock Average snapped a four-day winning streak, falling 67.19 points, or 0.68 percent, from Wednesday to 9,804.49. The broader Topix index of all First Section issues on the Tokyo Stock Exchange was down 4.59 points, or 0.53 percent, to 867.70.
Decliners were led by consumer finance, sea transport and air transport issues. Major gainers included the precision machinery, auto, and oil and coal product sectors.
Despite initial gains after a rally on Wall Street and various upbeat economic indicators this week that reassured investors of a continued recovery in the world economy, large sell orders in the futures market in afternoon trading triggered losses, pulling both key indexes into negative territory.
"The market is short of domestic buying incentives, with worries such as rising long-term interest rates and massive corporate financing plans putting a heavy lid on stock prices," said Hiroichi Nishi, equity manager at Nikko Cordial Securities Inc.
"Right now, the market is reacting very sensitively to any negative cue," Nishi added, citing losses in pharmaceutical shares after a government committee discussed lowering the price of medication with generic versions.
Hisamitsu Pharmaceutical sank 230 yen, or over 7 percent, to 2,860 yen, while Nippon Shinyaku plunged 104 yen, or almost 9 percent, to 1,076 yen.
Investors remained jittery about further strengthening of the yen, which hurts Japanese exporters, and uncertainties over the new government's economic policies, brokers said. Selling ahead of Friday's options settlement also added pressure.
"The yen remains relatively strong and although major exporters, especially automakers, have already revised their assumed exchange rate for the latter half of this fiscal year, there is a certain degree of caution about the U.S. dollar weakening further," said Yumi Nishimura, a senior equity market analyst at Daiwa Securities SMBC Co.
On the First Section, declining issues overwhelmed advancing issues 1,311 to 263, with 95 others remaining unchanged.
Shipper Nippon Yusen lost 13 yen, or about 4 percent, to 314 yen amid fears of per-share value dilution after reports of its plan to make its first public offering of common stock in 40 years as early as next month. Smaller rival Kawasaki Kisen fell about 6 percent.
Mizuho Financial Group, the day's volume leader, fell 2 yen, or over 1 percent, to 176 yen.
Among exporters that clung onto gains, value leader Toyota Motor rose 90 yen, or almost 3 percent, to 3,520 yen. Honda Motor gained 50 yen, or about 2 percent, to 2,905 yen while Nissan Motor was up over 1 percent.
FamilyMart climbed 40 yen, or almost 2 percent, to 2,525 yen on news that the convenience store chain operator and its top shareholder, major trading house Itochu Corp., are in the final stages of talks to acquire smaller rival am/pm Japan Co. Itochu also rose about 2 percent.
Trading volume on the main section came to 1,791.27 million shares, up from Wednesday's 1,697.57 million but still relatively thin.
The TSE's Second Section index was down 12.22 points, or 0.58 percent, to 2,085.29 on a volume of 61.14 million shares. On the Osaka Securities Exchange, the near-term December Nikkei 225 index futures contract was down 90 points to 9,790.
