Japanese shares closed flat on Wednesday as investors took a breather after a five-day rally in the Nikkei average that had lifted it to a 21-month high the previous day.
Profit-taking hit recent high-fliers such as auto makers, insurance firms and non-bank financial institutions, putting a lid on early gains, but banks continued to rise.
The key Nikkei average finished down 0.08 percent at 11,351.92, snapping a winning streak in which it gained 6.7 percent. It had risen as high as 11,430.01 in early business, its highest intraday level since June 11, 2002.
The broader TOPIX index eased 0.07 percent to 1,116.01, a day after it hit its highest close since June 4, 2002.
Bank shares were bought again, with Mizuho Financial Group among the winners. A company source told Reuters that Mizuho would return in March some of the public money it had borrowed in the late 1990s.
That would still leave Mizuho, one of the world's largest banks by assets, with over two trillion yen ($18.2 billion) in taxpayers' money to repay from a period when its fragile capital base needed bolstering, but it was nonetheless taken as a sign of the improving financial health of Japan's top banks.
With the Nikkei average up 42 percent since the start of the business year in April 2003, top banks are sitting on unrealized profits on their huge shareholdings, which will help them as they continue to write off problem loans.
Mizuho, the most active issue by value, rose for a fifth straight session, ending 2.9 percent higher at 355,000 yen.
UFJ Holdings, the fourth-biggest banking group, also rose for the fifth session, climbing 4.82 percent to 544,000 yen.
"Investors, including foreign funds, are picking up banks as a core sector to benefit from what is more likely to be a sustainable recovery in Japan," said Kenichi Hirano, a strategist at Tachibana Securities.
Analysts said foreign investors, in particular European fund managers, appeared to be boosting their Japanese stock weightings after a string of favorable economic indicators.
"Whether or not they believe in an imminent end to Japan's decade-long deflation, foreigners think that the market's downside risks have diminished to almost zero," said Hiroaki Muto, general manager at Nissay Asset Management.
Despite Wednesday's retreat, Muto said the Tokyo market should continue to rise in coming weeks, helped by an improvement in the supply and demand balance toward the beginning of the next fiscal year starting on April 1.
Domestic financial institutions often allocate fresh money to stocks and other assets at the start of a fiscal year.
Volume jumped on Wednesday, with 1.873 billion shares changing hands on the first section, the highest total since September 24. Gainers slightly outnumbered decliners 721 to 701.
NIKON GAINS
Another notable gainer was Nikon Corp, which rose 2.79 percent to 1,398 yen after a bullish outlook from President Teruo Shimamura.
Shimamura told Reuters in an interview that the precision equipment maker expected to post a group operating profit of 30-35 billion yen ($273-318 million) in the year starting April 1, far above its estimate for this year of one billion yen.
Investors grabbed profits from Toyota Motor Corp, Japan's biggest auto maker, and some of its rivals, which had been buoyed by a rise in the dollar to four-month highs around 110.40 yen on Tuesday. It was around 110.20 yen in late Tokyo trade on Wednesday.
Toyota fell 0.77 percent to 3,870 yen despite news of a 17 percent year-on-year rise in U.S. sales in February.
But Nissan Motor Co rose 0.73 percent to 1,248 yen after reporting a hefty 46 percent jump in February U.S. sales.
Among other losers, Sompo Japan Insurance Inc slumped 4.93 percent to 983 yen after Nomura Securities downgraded its rating on Japan's second-largest nonlife insurance company to "3" from "2," citing a rise in Sompo Japan's PER (price-earnings ratio) following a recent rally in the market.
Profit-taking hit recent high-fliers such as auto makers, insurance firms and non-bank financial institutions, putting a lid on early gains, but banks continued to rise.
The key Nikkei average finished down 0.08 percent at 11,351.92, snapping a winning streak in which it gained 6.7 percent. It had risen as high as 11,430.01 in early business, its highest intraday level since June 11, 2002.
The broader TOPIX index eased 0.07 percent to 1,116.01, a day after it hit its highest close since June 4, 2002.
Bank shares were bought again, with Mizuho Financial Group among the winners. A company source told Reuters that Mizuho would return in March some of the public money it had borrowed in the late 1990s.
That would still leave Mizuho, one of the world's largest banks by assets, with over two trillion yen ($18.2 billion) in taxpayers' money to repay from a period when its fragile capital base needed bolstering, but it was nonetheless taken as a sign of the improving financial health of Japan's top banks.
With the Nikkei average up 42 percent since the start of the business year in April 2003, top banks are sitting on unrealized profits on their huge shareholdings, which will help them as they continue to write off problem loans.
Mizuho, the most active issue by value, rose for a fifth straight session, ending 2.9 percent higher at 355,000 yen.
UFJ Holdings, the fourth-biggest banking group, also rose for the fifth session, climbing 4.82 percent to 544,000 yen.
"Investors, including foreign funds, are picking up banks as a core sector to benefit from what is more likely to be a sustainable recovery in Japan," said Kenichi Hirano, a strategist at Tachibana Securities.
Analysts said foreign investors, in particular European fund managers, appeared to be boosting their Japanese stock weightings after a string of favorable economic indicators.
"Whether or not they believe in an imminent end to Japan's decade-long deflation, foreigners think that the market's downside risks have diminished to almost zero," said Hiroaki Muto, general manager at Nissay Asset Management.
Despite Wednesday's retreat, Muto said the Tokyo market should continue to rise in coming weeks, helped by an improvement in the supply and demand balance toward the beginning of the next fiscal year starting on April 1.
Domestic financial institutions often allocate fresh money to stocks and other assets at the start of a fiscal year.
Volume jumped on Wednesday, with 1.873 billion shares changing hands on the first section, the highest total since September 24. Gainers slightly outnumbered decliners 721 to 701.
NIKON GAINS
Another notable gainer was Nikon Corp, which rose 2.79 percent to 1,398 yen after a bullish outlook from President Teruo Shimamura.
Shimamura told Reuters in an interview that the precision equipment maker expected to post a group operating profit of 30-35 billion yen ($273-318 million) in the year starting April 1, far above its estimate for this year of one billion yen.
Investors grabbed profits from Toyota Motor Corp, Japan's biggest auto maker, and some of its rivals, which had been buoyed by a rise in the dollar to four-month highs around 110.40 yen on Tuesday. It was around 110.20 yen in late Tokyo trade on Wednesday.
Toyota fell 0.77 percent to 3,870 yen despite news of a 17 percent year-on-year rise in U.S. sales in February.
But Nissan Motor Co rose 0.73 percent to 1,248 yen after reporting a hefty 46 percent jump in February U.S. sales.
Among other losers, Sompo Japan Insurance Inc slumped 4.93 percent to 983 yen after Nomura Securities downgraded its rating on Japan's second-largest nonlife insurance company to "3" from "2," citing a rise in Sompo Japan's PER (price-earnings ratio) following a recent rally in the market.