Tokyo's benchmark stock index finished lower Wednesday as individual investors shifted money from blue chips into the red-hot small companies sector. The U.S. dollar rose against the Japanese yen, but fell against the euro.
The benchmark Nikkei Stock Average of 225 selected issues lost 17.08 points, or 0.15 percent, to close at 11,473.35 points. The index fell 9.43 points, or 0.08 percent, on Tuesday.
The dollar was trading 105.25 yen at 5 p.m. Wednesday, up 0.14 yen from late Tuesday in Tokyo but below the 105.75 yen it bought in New York later that day.
On the stock market, electronic components maker TDK shed 1.7 percent, antivirus software maker Trend Micro fell 5.7 percent, and Takeda Pharmaceutical lost 0.6 percent.
Traders said the dollar's rise against the yen -- which boosts the profits of Japanese manufacturers -- would have lifted the market if local investors were not seeking to take profits.
"Despite the rise of the dollar that should have encouraged more high-tech stock buying, investors' aren't buying much of those key exporters yet," said Mitsushige Akino, general manager of the investment department at Ichiyoshi Investment Management Co. in Tokyo.
"But that's inevitable given that domestic institutions are only looking to take profits ahead of the March-end book closing, and that foreign investors have already bought many Japanese tech shares at bargain prices."
Among issues with small market capitalization, Cima Inc., an audiovisual solutions company, soared 43.75 percent and Sakha Diamond Corp., jumped 12.50 percent.
Analysts said the settling of February options and closely watched data on machinery orders due out Thursday were keeping investors cautious.
Despite the Nikkei index's slip, the broader TOPIX, the index of all issues on the Tokyo Stock Exchange's first section, gained 0.38 point, or 0.03 percent, to finish Wednesday's trading at 1,155.80 points. The TOPIX gained 1.00 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 dollar slipped against the yen in Asia Wednesday, pulled down by sales from Japanese exporters as well as profit taking after the U.S. unit's sharp overnight rise.
The euro rose to $1.2779 late Wednesday from $1.2769 late Tuesday but rose to 134.90 yen from 134.54 yen.
The yield on Japan's benchmark 10-year government bond rose to 1.3700 percent from Tuesday's finish of 1.3200 percent. Its price fell 0.43 to 99.39 points.