Tokyo stocks ended lower Wednesday for a third straight day, weighed down by selling of some exporters on a firmer yen amid speculation the Bank of Japan could end its negative interest rate policy at its meeting next week.
The 225-issue Nikkei Stock Average ended down 101.54 points, or 0.26 percent, from Tuesday at 38,695.97. The broader Topix index finished 8.73 points, or 0.33 percent, lower at 2,648.51.
On the top-tier Prime Market, decliners were led by marine transportation, pulp and paper and mining issues.
The U.S. dollar briefly dropped to the lower 147 yen level in Tokyo on yen buying on growing expectations about the BOJ's policy change. But the currency later recouped some losses, supported by higher-than-expected U.S. inflation data that reduced prospects of early interest rate cuts in the country, dealers said.
On the stock market, sentiment was hurt by speculation that the BOJ could shift from its aggressive monetary easing after news that major Japanese companies including Toyota Motor Corp. offered their largest pay hikes in decades at annual wage talks.
Auto and some other export-related issues were sold on concerns about a stronger yen, which reduces overseas profits of exporters when they are repatriated.
"The market appeared to be in a period of adjustment that could last even to the end of next week. Basically there remained a mood among participants to watch closely what comes from the BOJ meeting," said Toshikazu Horiuchi, equity strategist at IwaiCosmo Securities Co.
Meanwhile, the market's downside was limited by buying of semiconductor-related heavyweights such as Tokyo Electron following steep losses in recent days, with gains also supported by advances of their U.S. counterparts overnight.
