The Nikkei stock index snapped a four-day winning streak Monday, as investors moved to lock in gains amid concern the market is becoming overheated after a recent rally led to all-time highs late last week.
The 225-issue Nikkei Stock Average ended down 474.31 points, or 1.16 percent, from Friday at 40,414.12. The broader Topix index finished 35.58 points, or 1.26 percent, lower at 2,777.64.
On the top-tier Prime Market, decliners were led by precision instrument, service and real estate shares.
The U.S. dollar fell slightly in the lower 151 yen range in Tokyo on wariness over possible yen-buying market intervention by Japanese authorities, after Japan's top currency diplomat Masato Kanda reiterated Monday morning that appropriate action would be taken to curb excessive fluctuations.
Stocks remained in negative territory throughout the day as selling took hold after the benchmark index climbed over 2,100 points last week to hit a new milestone, analysts said.
"Investors were prompted to secure profits as there is a slight sense of caution following the surge of the Nikkei last week to briefly surpass 41,000 (for the first time)," said Yutaka Miura, senior technical analyst at Mizuho Securities Co.
Sentiment was also dented by a lackluster performance by Wall Street on Friday, while a fall in U.S. stock futures made investors "cautious about declines in the U.S. stock market tonight," Miura said.
A pause in the yen's depreciation against the dollar put further downward pressure on export-related shares, analysts said, as a stronger yen reduces their overseas profits when repatriated.
