TOKYO: Tokyo stocks retreated Thursday, having hit a 12-month high this week, while traders tracked losses on Wall Street ahead of a long, holiday weekend.
The Dow sank for just the fourth time this month on profit-taking Wednesday after hitting records on several days and heading towards the key 20,000 mark, with financial stocks rattled by concerns over Italy's troubled banking sector.
"With foreign investors on their Christmas holidays, the market will be devoid of buyers," said Mitsushige Akino, an executive officer at Ichiyoshi Investment Management Co.
"The downside will remain supported by dip buying by those who didn't get a chance to ride the recent rally," he told Bloomberg News.
Tokyo's benchmark Nikkei 225 index fell 0.16 percent, or 31.05 points, to 19,413.44 by the break, while the broader Topix index of all first-section issues was down 0.20 percent, or 3.14 points, at 1,541.80.
The index has been on a rally since Donald Trump was elected US president as dealers bet his plans for big spending and tax cuts will fan inflation and force the Federal Reserve to hike interest rates -- sending the dollar soaring against the yen.
In forex trade Thursday the dollar bought 117.60 yen, up from 117.53 yen in New York and more than 17 percent up since Trump's election win.
Financials were under pressure as Italy's ailing banking sector buckles under billions of dollars of bad loans, which many fear could collapse, sending shockwaves through global markets.
Even the Italian parliament's approval of a 20 billion euro ($20.9 billion) support package was not enough to soothe nerves.
In Tokyo banking giant Mitsubishi UFJ Financial fell 1.60 percent to 737 yen while Sumitomo Mitsui Financial sank 1.53 percent to 4,564 yen.
Japan Display fell 5.46 percent to 346 yen, while NEC was down 1.9 percent at 309 yen and Olympus lost 4.96 percent to end the morning at 3,930 yen.
But Honda rose 0.53 percent to 3,546 yen after it said it was in talks with a Google spin-off to jointly develop self-driving technology.
The auto giant is aiming at test drives on US roads with its vehicles loaded with sensors and software by Waymo, the self-driving technology company under Google's parent holding company Alphabet.
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