Share prices closed slightly lower as some investors cashed in gains made during the broad market's week long rise, dealers said. They noted however that the downside was limited with overall sentiment still positive after the government and the Bank of Japan's recent upbeat assessment of the economy. The Nikkei 225 index closed down 42.55 points or 0.35 pct at 12,273.12. The broader-based TOPIX index of all First Section issues fell 2.02 points or 0.2 pct to 1,250.10, its first fall in eight days. Decliners led gainers 868 to 626, with 154 issues unchanged. Volume reached 2.21 bln shares, much heavier than 1.85 bln shares yesterday. Despite today's profit taking foreign investors continued to view local equities favorably, dealers said. "Foreign investors, particularly hedge funds, are still buying actively after the Japanese government and Bank of Japan said the economy is emerging from a lull and as they expect victory for the Liberal Democratic Party at the upcoming (Sept 11) election," said Norihiro Fujito, a senior investment strategist at Mitsubishi Securities Co Ltd. But Fujito warned that the impact of surging oil prices may soon knock some of the positive gloss off the market as it is doing in the US and Europe.