Tokyo's benchmark stock index fell Wednesday morning as major banks and other domestic economy-related issues declined. The dollar pressed its recent gains against the Japanese yen and the euro.
The benchmark Nikkei Stock Average of 225 selected issues lost 22.35 points, or 0.19 percent, at 11,468.08 points in the morning session. The index fell 9.43 points, or 0.08 percent, on Tuesday.
The dollar was trading 105.75 yen at 11 a.m. Wednesday, up 0.50 yen from late Tuesday in Tokyo and level with what it bought in New York later that day.
The benchmark Nikkei posted early gains after the recovering dollar prompted an advance on Wall Street. The dollar had hit a two-month high of 105.94 yen in New York trading.
A stronger dollar helps Japanese exporters by boosting the value of their overseas earnings, and in morning trading, technology and exporter blue chips were mostly higher.
But losses by major banks, including Mitsubishi Tokyo Financial Group, UFJ Holdings and Sumitomo Mitsui Financial Group, and other domestic demand-related issues erased those gains.
Analysts said the settling of February options and closely watched data on machinery orders due out Thursday were keeping investors cautious.
The broader TOPIX, the index of all issues on the Tokyo Stock Exchange's first section, fell 0.08 point, or less than 0.01 percent, to 1,155.34 points. The TOPIX gained 1 point, or 0.09 percent, on Tuesday.
In New York, the Dow Jones industrial average rose 8.87 points, or 0.08 percent, to 10,724.63. The tech-heavy Nasdaq composite index gained 4.65, or 0.2 percent, to 2,086.68.
In currency trading, the euro slipped to $1.2757 early Wednesday from $1.2769 late Tuesday but rose to 134.86 yen from 134.54 yen.
The yield on Japan's benchmark 10-year government bond rose to 1.3500 percent, from Tuesday's finish of 1.3200 percent. Its price fell 0.26 to 99.56 points.