Japan shares end lower as COVID-19 cases jump in Tokyo

TOKYO, Nov 18 (Reuters) - Japanese shares closed lower on Wednesday, with the Nikkei retreating from a more than 29-year closing high notched a day earlier, as soaring COVID-19 cases in Tokyo halted a recent equity rally fuelled by vaccine optimism.

The benchmark Nikkei share average dropped 1.1% to 25,728.14, its biggest daily loss since Oct. 30.

The index, which has gained nearly 12% so far this month, posted its highest close since 1991 on Tuesday.

The broader Topix lost 0.81% to 1,720.65.

Both of the indexes extended their losses in the afternoon as market sentiment soured after local media reported that Tokyo hit a new single-day record of 493 coronavirus infections on Wednesday.

Earlier in the day, the Nikkei business daily reported that Tokyo was preparing to raise its COVID-19 alert level to the highest of four levels.

Japanese stocks also tracked Wall Street lower as surging COVID-19 cases, the growing threat of a fresh round of economic lockdowns and weak retail sales data dampened the euphoria caused by potential vaccine breakthroughs.

All but two of the 33 sector subindexes on the Tokyo exchange traded lower, with highly cyclical non-ferrous metals , airlines and shippers leading the decline on the main bourse.

Analysts said a sense of short-term overheating on the Nikkei and a stronger yen also prompted investors to book profits, sending export-oriented companies such as Toyota Motor Corp, Sony Corp and Honda Motor between 1.61% and 3.78% lower.

SoftBank Group Corp inched down 0.91%, mirroring the Nasdaq’s weak performance overnight.

Separately, the company’s chief executive officer, Masayoshi Son, said at the New York Times-hosted DealBook Online Summit that he was sitting on about $80 billion in cash for investments and share buybacks.

The Mothers Index of start-up firm shares bucked the overall sombre mood, closing 0.62% higher. (Reporting by Eimi Yamamitsu; Editing by Subhranshu Sahu and Devika Syamnath)