LONDON (ShareCast) - A strong bout of profit taking took shares in Tokyo lower on Monday, after Friday's rally, as the Bank of Japan's policy meeting gets underway.
The Nikkei 225 index closed down 1.5% or 165 points at 10,747 in Tokyo after jumping nearly 3% on Friday. The Hang Seng ended Monday's session down 10 points at 23,590. Stocks markets in the US will be closed on Monday to mark Martin Luther King, Jr. Day.
Shares in Japan came under pressure, as the yen remained stubbornly high against the dollar. The greenback fell under ¥90 to a low of ¥89.39 earlier in the session.
Japan's central bank has been under pressure from the country's new government to take more aggressive steps to fight deflation in the world's third biggest economy. Many expect the BoJ expect the central bank to beef up its asset-purchasing programme and set an inflation target of 2%.
Profit takers took a chunk out of stocks such as Fanuc which fell 3.9%. Honda Motor eased 0.6% while Suzuki Motor (Other OTC: SZKMF - news) dropped 2.5% while Mitsubishi Motors lost 3.2%.
Fast Retailing tanked 3.6%. TDK (Other OTC: TTDKY - news) was down 1.8%.
Sony (Xetra: 853687 - news) managed to shrug off an otherwise pressured market, rising 3.3% in frenzied trading, after Goldman Sachs (NYSE: GS-PB - news) last week upgraded the stocks to "neutral" from "sell".
In Hong Kong shares nursed modest losses as financials hit the skids and as telecom giant ZTE (HKSE: 0763.HK - news) warned on full year profit.
ZTE was down 1.4% in Hong Kong after its profit warning for 2012.
Other shares on the move included Vanke Properties Overseas which surged 12.8% on the Shenzhen exchange after announcing plans to move trading of its foreign currency shares to Hong Kong. Its Hong Kong dollar B shares jumped by the 10% daily limit.