Japan's Nikkei stock average lost 0.8 percent on Thursday, snapping a six-day rising streak as Nippon Yusen and other shippers sank after weak U.S. economic data tempered hopes for a global economic recovery.
Toshiba fell as some investors who bought shares on Wednesday at a public stock offering sold to take profits, market players said.
Weaker than expected U.S. data showing that the service sector contracted for the eighth straight month in May as half a million private sector jobs were lost came as a reality check, traders said.
"I think everyone realises that the market's bottomed out, but nobody is really confident at this point that things are truly getting better," said Tomomi Yamashita, a fund manager at Shinkin Asset Management.
"Investors need more economic data to see what's really going on."
The benchmark Nikkei lost 72.71 points to 9,668.96, a day after it hit an eight-month closing high for its sixth straight day of gains.
The broader Topix shed 0.4 percent to 910.99.
"Hopes for the economy had become too optimistic, and U.S. data yesterday provided an opportunity for profit-taking," said Yumi Nishimura, a deputy general manager of the investment advisory section at Daiwa Securities SMBC.
"But the data did not change the view that a recovery is still taking place, and investors' response has been calm."
SHIPPERS SINK
Nippon Yusen, Japan's largest shipping firm, and other shippers led the market lower as they succumbed to profit-taking after a run of recent sharp gains.
The shipping sub-index dropped 7.4 percent from the 8-month intraday high touched on Tuesday, despite a further gain by the Baltic Exchange's main sea freight index.
The index, which gauges the cost of shipping resources from iron ore to grain, rose for its 23rd straight day on Wednesday, boosted by expectations of strong demand for commodities.
Nippon Yusen fell 4.5 percent to 444 yen, Mitsui O.S.K. Lines lost 3.4 percent to 680 yen and Kawasaki Kisen lost 3.5 percent to 440 yen.
Mitsui O.S.K.'s senior managing executive officer told Reuters on Thursday afternoon that spinning off the firm's container shipping division is one option to turn around the loss-making business . The statement sent shares to their day's low of 675 yen.
Shares of Toshiba fell 2 percent to 365 yen, becoming the most active stock by both turnover and volume on the Tokyo Stock Exchange's first section.
Last month, Toshiba said it would raise up to $5 billion through an issue of shares and subordinated loans, issuing 897 million new shares. There is also a greenshoe option of 103 million shares.
"There's been selling by some investors aiming for short-term profits. The IPO price was 333 yen, which gives them a profit of about 10 percent, so it's no wonder there has been selling," said an investment information manager at a second-tier brokerage declining to be identified.
But slides were limited by Mitsubishi Motors Corp, which soared 11.8 percent to 171 yen after the Asahi newspaper said the automaker will release plug-in electric cars by 2013, based on its Pajero SUV.
Life insurance holding company T&D Holdings gained 5.9 percent to 2,775 yen after UBS started coverage of the insurance group at "buy" with a 12-month target price of 3,400 yen, saying the company has focused on markets with good growth potential and steadily improved its position in the life insurance sector.
Trade was active, with 2.5 billion shares changing hands on the Tokyo Exchange's first section compared with last week's daily average of 2.1 billion.
Advancing shares outnumbered declining ones 818 to 753.
