Roundup: Nikkei closes down 0.59 pct as market enters correction phase, yen's rise, profit-taking weighs

The Nikkei stock index fell 0.59 percent Wednesday as the market enters a period of short-term correction following an 8.5 percent gain in the past month that has seen investors looking to take profits. A weak lead from Wall Street and the yen's advance against the U.S. dollar also weighed on the market.

The Nikkei 225 index dropped 11.56 points to close the day at 18,703.60, while the broader Topix index of all first-section issues lost 0.64 percent, or 9.82 points, to finish at 1,517.01.

Local traders said that the market was taking a breather following a run of gains, as sections have been overbought and are overheating. They also said that investors were taking profits while they could as the short-term correction would likely see issues dragged down further.

Analysts also said that investors were taking a wait-and-see approach ahead of a key annual meeting in China's parliament and news from the European Central Bank on its new plan to buy bonds.

In addition, investors are keenly eyeing a report for this month on the U.S. labor market due to be released on Friday and meanwhile seem to be content to let the market breathe for a while.

With major bourses in New York closing lower after record highs a day earlier, the U.S. dollar eased to 119.63 yen from 119.74 logged in New York. A stronger yen weighs on exporter shares as their companies see their overseas profits reduced when repatriated when the currency is weak.

"Yen weakness has taken a breather, as have U.S. and major European stocks, so it's likely that Japanese stocks will also be pulled down. Several technical indicators are pointing to overbuying in Japanese stocks," said Hiroichi Nishi, an equities manager at SMBC Nikko Securities Inc.

As such, export-relate issues lost ground, with Toyota reversing 0.29 percent to 8,112 yen, while Sony lost 0.59 percent to close the day at 3,325 yen.

Struggling electronics maker Sharp slumped a further 5.3 percent to 232 yen, having lost more than 3.5 percent a day earlier, after reports said it will announce net losses for the year to March of 200 billion yen (1.7 billion U.S. dollars) and look to its two main lenders for aid as it restructures, including a major exchange of debt for equity.

Warning of more downgrades to follow, Standard & Poor's cut Sharp's credit rating from junk by three more notches.

Sumco was another notable decliner Wednesday, tumbling 12.7 percent to 2,125 yen, after it announced it would offer as much as 60 billion yen's worth (500 million U.S. dollars) in new public shares.

Dai-ichi Life fell 2.8 percent to 1,767 yen and convenience store operator Lawson dropped 1.8 percent to 7,720 yen, with Nomura cutting its rating on the stock from "buy" to "neutral" and lowing its share price from 8,500 yen to 8,200 yen.

But Nikkei heavyweight Fast Retailing, operator of the Uniqlo chain of high street apparel stores added 0.3 percent to 46,165 yen, after posting robust monthly sales figures for February and NGK Insulators was another notable gainer, adding 3.1 percent to 2, 403 yen, following SMBC Nikko upgrading the stock from "neutral" to "buy."

Trading volume on Wednesday dropped to 2.13 billion shares on the Tokyo Exchange's First Section, down from Tuesday's volume of 2.31 billion shares, with declining issues outpacing advancing ones by 1,127 to 595. Endi