Japan's Nikkei average inched down 0.2 percent on Tuesday, with Advantest Corp and other exporters hit by continued strength in the yen and as investors grew cautious ahead of a Federal Reserve meeting.
But losses were countered by gains in property developers after Secured Capital Japan Co said it plans to buy a building in central Tokyo, in a deal sources said could be worth about $1.6 billion, prompting hopes for further investment in the sector.
The Federal Reserve starts a two-day meeting on Tuesday and is seen likely to keep rates unchanged near zero. But all eyes are on the accompanying statement, especially after upbeat sales and jobs data led markets to price in the chance of a rate hike in mid-2010.
"The market is now just waiting for more trading clues. The Fed meeting and its statement as well as U.S. economic data and ensuing reactions in the currency market are a main focus," said Kazuhiro Takahashi, general manager at Daiwa Securities SMBC.
"But hopes that overseas investors might revive active investment in Japanese property assets are lifting real estate stocks."
In moderate trade, the benchmark Nikkei fell 22.20 points to 10,083.48, while the broader Topix was flat at 884.63.
The Nikkei has gained about 14 percent since the start of the year, though it is still down roughly 6 percent from a year-high hit in August above 10,700.
Global credit worries also continued to weigh on investor confidence, an analyst said.
"Even though Dubai concerns have been greatly eased, the fact that S&P cut Mexico's rating yesterday is keeping foreign investors a bit jittery and making it hard for them to buy stocks," said Hideyuki Ishiguro, a strategist at Okasan Securities.
Dubai said on Monday it had received $10 billion from fellow UAE member Abu Dhabi, easing fears of a potential debt default that had rattled global markets.
But Standard & Poor's cut its credit rating on Mexico by one notch to BBB from BBB plus exactly one week after Fitch became the first ratings agency to downgrade the country in more than a decade.
EXPORTERS DOWN, PROPERTY FIRMS SHINE
The dollar was steady against the yen around 88.75 yen after falling the day before, with the yen's strength continuing to weigh on exporters.
Large manufacturers expect the dollar to average 92.93 yen in the year to next March, according to the Bank of Japan's quarterly tankan survey this week. That was down from 94.50 yen in the September survey, but manufacturers will have to lower expectations further should the yen continue to strengthen.
Advantest slid 1.8 percent to 2,135 yen and Kyocera Corp fell 0.6 percent to 7,840 yen. Toyota Motor Corp dipped 0.3 percent to 3,700 yen.
Shares of Secured Capital Japan Co surged 11.6 percent to 96,300 yen after the property fund manager said it plans to buy a 32-storey office building in a prime location near Tokyo railway station.
Property developers were also helped by news of a 10.8 percent jump in new apartments put up for sale in the Tokyo area in November from a year earlier.
Mitsui Fudosan Co climbed 2.1 percent to 1,559 yen, Mitsubishi Estate Co jumped 2.9 percent to 1,469 yen and Sumitomo Realty & Development Co shot up 4.6 percent to 1,711 yen.
Leopalace21 soared 10.5 percent to 317 yen after Credit Suisse hiked its rating on the apartment builder to "outperform".
Mitsubishi UFJ Financial Group rose 1.4 percent to 448 yen, snapping a four-day losing run partly on short-covering, after it priced a share sale at 428 yen to raise up to $11.6 billion to help meet stricter global capital requirements.
Some 2 billion shares changed hands on the Tokyo exchange's first section, slightly below last week's daily average of 2.2 billion.
Declining stocks outnumbered advancing ones by 861 to 668.
