TOKYO: Japanese shares fell on Thursday as the Nasdaq's weak overnight finish hurt risk appetite, prompting investors to sell heavyweight technology stocks, but expectations for strong earnings results from domestic firms limited losses.
The Nikkei share average was down 0.30% to 29,167.69 by 0211 GMT, while the broader Topix fell 0.26% to 2,022.30.
Overnight, the S&P 500 and the Dow rose, with the Dow hitting an intraday record high, while the Nasdaq lagged as technology stocks took a breather.
"The Nasdaq's weak finish affected shares such as SoftBank Group, and Recruit, which is seen as an equivalent of the GAFA because it owns US job research engine," said Norihiro Fujito, chief investment strategist, Mitsubishi UFJ Morgan Stanley Securities.
Global technology start-up investor SoftBank Group fell as much as 2.16% earlier in the session before edging up 0.07%.
Staffing agency Recruit Holdings, which has built footsteps in the US through employment site Indeed, fell 1.62%.
Chip-making equipment maker Tokyo Electron dragged the Nikkei the most, falling 2.73% but snapped its early losses of as much as 3.9%.
Other Japanese chip related shares also fell after the weaker-than-expected earnings of semiconductor companies ASML and Lam Research, but results were not so pessimistic when examining details, Fujito said.
"We can expect strong earnings from Tokyo Electron as there is a demand for chips, which is why the stock has pared its early losses."
Airlines, down 1.93%, lost the most among the exchange's 33 industry subindexes amid concerns about a possible resurgence of the COVID-19 infections as cases in the UK rose.
Oil related shares shined as oil prices rose.
Nippon Paint Holdings advanced 2.93% after the world's fourth largest paint company announced an acquisition of decorative paints specialist Cromology.
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