TOKYO Japan's Nikkei share average fell on Thursday, slipping further from a one-year high hit earlier this week, although it is heading for its best January-March quarter performance in 14 years.
As the quarter and Japanese fiscal year-end approach, investors were locking in gains, which have seen the Nikkei average .N225 rallying 19.4 percent since the start of January, buoyed by a run of strong U.S. economic data and accommodative monetary policies by central banks.
"We saw a lot of profit-taking in the U.S. and other overseas markets; we saw a couple of macro data points weaker than expected, so we have a little bit of profit-taking," a sales trader at a foreign bank said.
In the United States, new orders for long-lasting factory goods increased only modestly in February, supporting the view that economic growth in the first quarter could be lackluster.
After 12th straight week of buying, foreign investors sold a net 242.7 billion yen ($2.93 billion) of Japanese stocks for the week through March 24, data from Japan's Ministry of Finance showed.
The Nikkei eased 0.9 percent to 10,090.16 after losing 0.7 percent on Wednesday as the deadline expired for investors to buy stocks in the most companies to gets rights for the current year's dividend.
Despite the ex-dividend impact on Japanese equities, the Bank of Japan on Wednesday bought 26.6 billion yen worth of exchange traded funds to support the market.
"New York fell overnight and if you look at the forex rate it is tipping towards a stronger yen so I think the market is in a bit of an adjustment today," said Yutaka Miura, senior technical analyst at Daiwa Securities.
Exporters, sensitive to the Japanese currency, suffered, with Toyota Motor Corp (7203.T) off 1.8 percent, Honda Motor Corp (7267.T) losing 2.2 percent and industrial robot maker Fanuc Corp (6954.T) down 1.7 percent.
Topping the list of most actively traded stocks was Sharp Corp (6753.T), which soared 6.3 percent to a two-month high, extending the previous session's more than 15 percent surge after it said this week it will issue shares worth $808 million to Taiwan's Hon Hai Precision Industry (2317.TW).
Despite the rally, Sharp was still not yet in "overbought" territory with its 14-day relative index at 65.6, below the 70 threshold that signals a stock may be poised to fall.
The broader Topix .TOPX fell 1 percent to 855.97.
Shippers were also in demand, up 1.8 percent as the best sectoral performer after the Baltic's capesize index .BACI turned positive after 20 straight sessions, as expectations of demand recovery in top consumer China aided sentiment.
Kawasaki Kisen Kaisha Ltd (9107.T) climbed 3.4 percent, while Mitsui O.S.K. Lines Ltd (9104.T) gained 2.2 percent and Kyoei Tanker Co Ltd (9130.T) rose 2.7 percent. ($1 = 82.8900 Japanese yen)
(Additional reporting by Mari Saito; Editing by Ramya Venugopal)