TOKYO Japan's Nikkei average fell to a three-week closing low on Wednesday as investors remained cautious ahead of a serious of key events this week, including policy meetings by the European Central Bank and the Bank of Japan and U.S. jobs data.
But losses were capped by gains in index heavyweight Fast Retailing Co Ltd (9983.T), which climbed 3.7 percent after the Nikkei daily said the operator of casual clothing chain Uniqlo should see sales top 1 trillion yen ($12.8 billion) in the year ending August 2013, up 7.6 percent from its estimate of 929.50 billion yen in the last financial year.
The Nikkei .N225 slipped 0.5 percent to 8,746.87 points in relatively light volume, down for the fourth straight session, its longest losing run since early September.
"We have a few data points this week ... People are a bit wary," a senior dealer at a foreign bank said.
Nissan Motor Co (7201.T) dropped 2.1 percent after its U.S. passenger car sales fell 1.1 percent in September from the same month last year.
Rival Toyota Motor Corp (7203.T) saw a 41.5 percent jump year-on-year over the same period, leaving its share price up 0.4 percent.
"The poor performance by Nissan, however, combined with the significantly higher risk now in China, may lead to worse-than-expected profitability this term," Societe Generale said in a note.
But of the big three Japanese automakers, Nissan offers the cheapest valuation, with a 12-month forward price-to-earnings ratio of 6.3 versus Toyota's 9.7 and Honda Motor Co's (7267.T) 7.8, according to Thomson Reuters Datastream.
BOJ IN THE FRAME?
Both the ECB and the BOJ were due to start policy meetings on Thursday, with some market participants expecting the Japanese central bank to offer further monetary policy easing.
"I think the BOJ is likely to loosen monetary policy because they said they would act if the economy worsened, which their last tankan survey bore out," said Kyoya Okazawa, head of equities and commodity derivatives at BNP Paribas in Tokyo.
Underscoring concerns over sluggish Chinese growth, Australian exports dropped 3 percent in August from the previous year as a slowdown in China, the country's biggest export market, crimped shipments of raw materials such as metals and coal.
Investors fear Japanese firms' revenues in China, which is also Japan's largest export market, will fall sharply in September after some Japanese factories and shops were closed following protests triggered by a territorial dispute, which remains unresolved.
The Nikkei China 50 .NCHN, comprised of Japanese firms with heavy exposure to the world's second-largest economy, lost 0.7 percent, underperforming the benchmark Nikkei.
"The greatest concern for the market right now is how long this dispute could drag on," BNP Paribas' Okazawa said.
SmartEstimates from Thomson Reuters StarMine expects an average negative earnings surprise of 1.2 percent for this quarterly results reporting period, which will kick into high gear in two to three weeks.
However, the president of Murata Manufacturing Co Ltd 6891.OS said the precision machinery firm and supplier to Apple Inc (AAPL.O) could escape those headwinds thanks to strong demand from smartphone makers, and with its Chinese factories at full capacity.
The broader Topix .TOPX index eased 0.5 percent to 727.39, with nearly 1.4 billion shares changing hands, up from Tuesday's 1.36 billion but down from last week's average of 1.6 billion.
Supermarket chain operator Uny Co Ltd 8270.T slumped 11.2 percent after it cut its operating profit forecast for the year ending February 20, with its second-quarter figures coming in below market expectations.
Other decliners included Daiichi Sankyo Co Ltd (4568.T), which sank 5.4 percent to a record low after U.S. biotechnology company ArQule Inc (ARQL.O) said it will discontinue a late-stage trial of the lung cancer drug it is co-developing with Daiichi Sankyo after an interim analysis showed the drug would not improve overall survival.
(Additional reporting by Sophie Knight; Editing by Kim Coghill)