The Nikkei average trod water in slow trade on Tuesday, as Tokyo Electron Ltd and other exporters were hit by a slight rise in the yen, while property firms such as Sumitomo Realty & Development Co Ltd recouped recent losses.
Shares of Goodwill Group Inc, a provider of staff for nursing homes, tumbled after it said on Monday it would issue rights for shares equal to about 19 percent of its outstanding stock to the London branch of Deutsche Bank AG, diluting the value of existing shares.
The yen pulled away from a 4-1/2 year low against the dollar hit last week after Japan's finance minister warned that markets should be aware of the risks of one-way bets against the Japanese currency. That prompted investors to sell shares of Tokyo Electron and other firms that make the bulk of their sales outside of Japan.
"Blue chip stocks are a little less attractive at the moment," said Shigemi Nonaka, a special adviser at Polestar Investment Management, referring to the rise in the yen.
"Especially shares of electronics companies." The Nikkei ended down 0.12 percent or 21.37 points at 18,066.11. The broader TOPIX index rose 0.06 percent to 1,765.87. The Tokyo exchange saw its slowest day of trading in a month, with just 1.76 billion shares changing hands on the first section. Declining shares outnumbered advancers 834 to 748.
Chip-equipment maker Tokyo Electron, which makes some 60 percent of its sales overseas, fell 1.5 percent to 9,130 yen. A rise in the yen dents exporters' profits when earnings from abroad are brought home. Sony Corp fell 0.9 percent to 6,400 yen.
But property firms recovered some recent losses. Developer Sumitomo Realty gained 1.5 percent to 4,060 yen after falling 3.9 percent in the previous session. Fellow developer Mitsui Fudosan Co Ltd rose 1.5 percent to 3,480 yen.
Shares of Goodwill Group tumbled 9.3 percent to 46,000 yen after the company said on Monday it would issue rights for 400,000 new shares to Deutsche to boost shareholders' equity. The new shares would dilute Goodwill's stock by 18.85 percent.
Trade was likely to remain slow for the rest of the week, as investors look ahead to consumer price data and unemployment figures on Friday and the Bank of Japan's tankan survery of business sentiment next week, said Masayoshi Okamoto, head of dealing at Jujiya Securities. "These are events that the market needs to get over, and in the meantime, we'll see stock prices move in a narrow range," he said.