Tokyo stocks fell Wednesday as investors sold real estate and other domestic demand-related issues following the release of poor Japanese economic data. The U.S. dollar was lower against the Japanese yen and the euro.
The Nikkei Stock Average of 225 selected issues lost 44.81 points, or 0.38 percent, to close at 11,601.68 points. On Tuesday, the index added 14.29 points, or 0.12 percent.
The dollar was trading at 104.99 yen at 5 p.m. (0800 GMT) Wednesday, down 0.05 yen from late Tuesday in Tokyo but above the 104.42 yen it bought in New York later that day. The dollar traded between 104.42 yen and 105.16 yen in Tokyo.
Stocks moved lower after the Cabinet Office said Japan's gross domestic product -- the value of goods and services produced in the nation -- contracted 0.5 percent in annualized terms in the October-December period.
Economic growth shrank 0.1 percent from the previous quarter.
The GDP numbers, updated and seasonally adjusted, represented three straight quarters of contraction.
But traders and fund managers said the gloomy news was tempered by hopes that Japan's economic growth will pick up this year.
Many players dismissed the October-December GDP data and instead cited last week's solid machinery order figures -- a leading indicator of business investment several months down the line -- as a reason to remain upbeat on Japan's economic prospects.
"No one drives a car by looking in the rearview mirror," said Masaaki Higashida, deputy general manager at Nomura Securities.
Still, shares related to domestic demand took a beating on Wednesday.
Major real estate company Mitsubishi Estate lost 2.1 percent, and Mitsui Fudosan shed 2.0 percent. Builders Kajima Corp., Taisei Corp. and Obayashi Corp. finished lower, as did some autos, including Honda Motor Co. and Mazda Motor Corp.
Many investors were also awaiting congressional testimony later Wednesday by U.S. Federal Reserve Chairman Alan Greenspan in Washington.
The broader TOPIX, which includes all issues on the market's first section, shed 3.25 points, or 0.28 percent, to finish Wednesday's trading at 1,164.94 points. The TOPIX dipped 0.42 point, negligible in percentage terms, the day before.
First-section volume fell to 1.488 billion shares, from Tuesday's 1.518 billion shares. Decliners outnumbered advancers 1,095 to 403, while 105 issues were unchanged.
In New York Tuesday, U.S. stocks gained on retail sales growth.
The Dow Jones industrial average rose 46.19 points, or 0.43 percent, to 10,837.32, its best close since Dec. 28. The Nasdaq composite index gained 6.30 points, or 0.3 percent, to 2,089.21.
In currencies, the dollar slipped against the yen in Asia Wednesday, but many players were staying on the sidelines before Greenspan's testimony.
The euro rose to US$1.3025 late Wednesday afternoon in Tokyo from US$1.2961 late Tuesday and was up at 136.80 yen from 136.18 yen.
The yield on Japan's benchmark 10-year government bond fell to 1.4150 percent from Tuesday's finish of 1.4550 percent. Its price rose 0.34 point to 99.00.