The broader Topix closed 0.03% lower at 3,369.39.Chip testing equipment manufacturer Advantest rose 1.43%, providing the biggest boost to the Nikkei. SoftBank Group pared early losses to finish 1.3% higher.
Fiber optic cable manufacturer Fujikura also changed its price to an inch 0.15% higher.
US markets offered mixed signals overnight, with the Nasdaq closing higher, while the S&P 500 and the Dow Jones Industrial Average ended lower, pressured by losses in healthcare and energy stocks.
“It is difficult to actively bet ahead of the Bank of Japan’s policy decision this week. The market fully priced in the rate hike at the BOJ’s policy meeting, but investors want to know the pace of the rate hike next year,” said Shota Sando, stock market analyst at Tokai Tokyo Research Institute. The BOJ is widely expected to raise rates by 25 basis points to 0.75% on Friday, the highest level in three decades, signaling further tightening, ending the year with two rate hikes despite headwinds from US rates and the inauguration of a dovish prime minister.
The Nikkei is likely to trade without clear direction through the end of the year, swinging between small gains and losses as investors take profits after strong gains in technology stocks, Sando said. However, he added that demand from individual investors looking to buy on dips should provide support.
Among other stocks, copper smelter Dowa Holdings rose 7% to become the biggest percentage gainer in the Nikkei after Daiwa Securities raised its price target.
On the main market of the Tokyo Stock Exchange, 41% of shares rose, 54% fell and 4% were unchanged.
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