Japan's stock benchmark Nikkei pulled back on profit-taking on Thursday, a day after rallying to more than 10-month highs, as investors waited for signs of progress on US-China trade talks and Brexit negotiations.

The Nikkei average edged 0.1% lower to 22,451.86, holding within a tight range near its highest since early December hit on Wednesday, while the broader Topix retreated 0.45% to 1,624.16.

Some investors locked in profits after the recent rally and ahead of Japan's mid-year earnings season, analysts said.

On Wednesday, Wall Street stocks lost ground after soft US retail data, in a potential sign that manufacturing-led weakness could be spreading to the broader economy. A solid start to the earnings season helped counter losses, but that was partly because markets had already marked down expectations.

As Britain and the European Union scrambled to secure a last-minute Brexit deal, investors digested mixed headlines on the likelihood of progress at a EU leaders summit in Brussels later on Thursday.

Japanese chip-related stocks fell, taking their cue from Wall Street peers as well as Dutch ASML, which dropped 4.5% as investors took profits after the semiconductor equipment maker announced better-than-expected results on Wednesday.

Tokyo Electron dropped 0.6% and Screen Holdings slid 1.4%.

Murata Manufacturing climbed 1.1% after its chief executive Tsuneo Murata told the Nikkei business daily that the electronic components market was bottoming out, stirring hopes that the industry may be emerging from a year-long slowdown.

Subaru fell 0.5% after the carmaker said it would suspend production at its Gunma factory until October 24 due to supply disruptions caused by Typhoon Hagibis.

Elsewhere, commodity-related sectors fared worse. The non-ferrous metal and the iron and steel were among the worst performers in the Tokyo bourse's 33 subsector indexes, down 1.0% and 0.9%, respectively.

Copyright Reuters, 2019

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