Tokyo's Nikkei average ended higher on Thursday as bargain hunters returned to blue chips such as Toyota Motor Corp in late trade, but concern over the technology sector outlook hit several tech shares.
Adding fuel to such anxiety, South Korea's Samsung Electronics Co Ltd, the world's biggest maker of memory chips, said it expected prices of liquid crystal displays (LCD) to fall as much as a fifth by the end of the year due to growing supply. It posts quarterly results on Friday.
Shipping firms and drug makers rose as investors looked for bargains after a 2.2 percent drop in the Nikkei the previous day, with investors still confident in Japan's economic recovery, analysts said.
The benchmark Nikkei erased earlier losses and closed up 0.46 percent at 11,409.14 but the broader TOPIX index ended down 0.03 percent at 1,151.12.
"Even though the market changed course in the afternoon, the general trend is still 'sell-tech, chase low-PER stocks' and this trend is likely to last for a while," said Terushi Hirotama, head of trading at Ichiyoshi Securities.
Analysts said PERs (price-earnings ratios) for some auto makers and some blue chip stocks were too low considering their business outlook, and it might be wiser to seek such stocks rather than chase tech stocks, whose PERs were already high and their business outlook uncertain.
Toyota, Japan's biggest auto maker with a PER of 13.15, rose 0.46 percent to 4,370 yen. Honda Motor Co added 0.8 percent to 5,040 yen.
Nippon Yusen K.K., Japan's biggest shipping company, gained 1.55 percent to 524 yen on hopes of strong earnings.
Credit Suisse First Boston said in a report dated July 15 that the marine transport sector's first-quarter earnings momentum was "extremely good".
Tokyo Electron Ltd and other chip-related stocks sank as investors, disappointed by bellwether Intel Corp's forecast earlier this week, unloaded stocks ahead of Samsung's earnings.
Many Japanese companies, including tech firms, will start posting first-quarter earnings results and business outlooks from next week.
Tokyo Electron, the world's second-biggest maker of chip-making equipment, extended losses into a fourth day and fell to a 13-month intraday low of 5,210 before recovering marginally to close at 5,270 yen, down 1.86 percent.
Advantest Corp, the country's leading maker of semiconductor testing devices, fell 0.16 percent to 6,430 yen and precision machinery maker Dainippon Screen Manufacturing Co Ltd fell 2.41 percent to 566 yen.
Among other notable movers, Mitsubishi Tokyo Financial Group leapt 11.65 percent to 1.15 million yen, adding to Wednesday's 7.4 percent rally after UFJ Holdings Inc said it would seek a take-over by MTFG that would create the world's biggest banking group by assets.
UFJ Holdings lost 6.51 percent to 488,000 yen.
About 1.12 billion shares changed hands on the first section, down from Wednesday's total of 1.397 billion. Losers outnumbered gainers 962 to 476.
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