Tokyo's Nikkei share average edged down 0.3 percent on Tuesday, snapping a five-day winning streak as investors cashed in on some exporters such as Nissan Motor Co and other recent winners. Sanyo Electric Co, however, held onto recent gains after its three-year business plan came almost in line with expectations. Retailers such as Aeon Co also found favour, with investors drawn by strong earnings and hopes for improved consumer spending after strong economic data recently.
But their buying failed to spill into other sectors, reflecting caution over the outlook for the Japanese economy and corporate earnings.
"The retail sector has gathered a lot of attention and risen on quarterly earnings results, improvement in sales data at existing stores and good employment and wage numbers. But the lack of follow-up buying in other sectors shows there's a limit in this market," said Koichiro Suzuki, senior investment manager at Sompo Japan Asset Management.
The Nikkei closed down 34.85 points at 11,616.70 after hitting its highest finish since April 12 the day before.
It had climbed 2.1 percent during the previous five sessions and advanced 7.6 percent since May 17, when it hit its lowest close since mid-December at 10,825.39.
The broader TOPIX index fell 0.23 percent to 1,183.41.
The Bank of Japan's tankan corporate survey last Friday showed businesses were more positive about the domestic economic outlook, but concerns remained on decelerating exports and the impact of high oil prices on consumer sentiment in the United States, a major market for Japanese exporters, analysts said.
"Let's lock in profits before the New York market resumes trading, that's the market's mood here," said Masatoshi Sato, senior strategist at Mizuho Investors Securities, referring to Monday's closure of US financial markets for Independence Day.
The market took in its stride parliamentary approval of bills to privatise Japan's postal system, legislation that is the centrepiece of Prime Minister Junichiro Koizumi's reform agenda.
A defeat could have resulted in a snap general election.
Nissan, Japan's second-biggest auto maker, fell 0.7 percent to 1,108 yen. Nissan hit its highest closing level in almost three months on Monday as a rise in the dollar to around 112 yen its loftiest level since August last year, fuelled hopes for higher earnings.
Third-ranked Honda Motor Co lost 0.6 percent to 5,470 yen. Toyota Motor Corp, however, rose 0.5 percent to 4,060 yen after a newspaper reported the world's second-biggest auto maker would double its production of hybrid electric-and-gas-powered vehicles in 2006.
Internet company Softbank Corp lost 1.1 percent to 4,370 yen after a recent advance sparked by newspaper reports on its expanding communications businesses ran out of steam.
Sanyo Electric ended up 0.3 percent at 297 yen after the struggling consumer electronics maker said it would cut 15 percent of its global work force over the next three years.
Sanyo's new Chief Executive Tomoyo Nonaka also said she would focus resources on batteries and other promising technologies that are friendly to the environment.
Top Asian retailer Aeon jumped 2.5 percent to 1,795 yen a day after the company said its quarterly operating profit rose 24.5 percent due to strong performances by group firms and recovering core sales.
Investors also flocked to Seiyu Ltd, the Japanese affiliate of Wal-Mart Stores Inc, after the Nihon Keizai business daily reported that Seiyu would become a subsidiary of the US giant this year. Seiyu rose 6.1 percent to 228 yen.
Wal-Mart and Seiyu said no decision had been made.
Fast Retailing Co, the operator of the Uniqlo clothing chain, jumped 9.3 percent to 6,490 yen after it said on Monday that sales in June at stores open more than a year rose 13.7 percent from a year ago, the first growth in five months.
Trade was slow, with turnover on the main board staying below 1 trillion yen ($8.96 billion) for a second session. Yet, volume increased to 1.41 billion shares from Monday's 1.26 billion.
Decliners swept past advancers, 1,062 to 427.
A rally in small-cap stocks came to a halt as the Nikkei Jasdaq average fell 0.06 percent to 2,008.03, snapping its 13-day winning streak.
Buying by individual investors looking for short-term gains had propped up Internet-related stocks in particular.
Index Corp, a provider of Internet content for cellphones, retreated from a share-split-adjusted peak of 357,000 yen marked on Monday, ending the day down 2.3 percent at 345,000.
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