Japanese stocks finished slightly lower after a choppy session on Thursday, as investors kept a wary watch on tension over North Korea ahead of Japan's long weekend.
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The Nikkei finished down 8.97 points, or 0.1 percent, at 19,729.74, erasing early morning gains.
The benchmark index tumbled 1.3 percent on Wednesday to hit the weakest closing since May 31 in the wake of U.S. President Donald Trump's "fire and fury" threat to North Korea, and Pyongyang's warning that it was considering an attack on Guam.
Excessive fears surrounding North Korea seemed to have receded, traders say, but activity was subdued with Japanese markets closed on Friday. Investors remained wary of events that could lead to a spike in volatility in the foreign exchange market.
The dollar inched lower to 109.99 yen on Thursday, holding above Wednesday's low of 109.56 yen, which was the greenback's lowest level since June 15.
Against the backdrop of geopolitical tension, market participants also focused on individual earnings.
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"We are at the end of an intense first-quarter earnings season, and that changes the dynamics or focus for brokers and the buyside going into next week, from one which is more reactionary to the constant flow of results, to one which is more about the bigger picture," said Stefan Worrall, director of Japan equity sales at Credit Suisse in Tokyo.
"There's been mixed results, but the general feeling is that the results are quite strong across a broad range of sectors," he said. "If the rest of the world remains supportive, then there's reason in these earnings to be encouraged about the direction of the Japanese market, which has sort of been in a holding pattern for the past two months."
Financial stocks underperformed after U.S. Treasury yields fell as bond prices rose in Wednesday's flight to safety.
Insurers and banks, which invest in higher-yielding products such as foreign bonds, underperformed after U.S. Treasury yields fell on Wednesday, with the yields on the benchmark 10-year note hitting a six-week low.
Dai-ichi Life Holdings dropped 1 percent, T&D Holdings fell 2.2 percent while Mitsubishi UFJ Financial Group declined 0.9 percent.
Cosmetics maker Shiseido Co soared 13.8 percent after raising its operating profit outlook to 56 billion yen from 45.5 billion yen for the year through December, thanks to strong sales in high-end cosmetics. It also raised its annual dividend forecast to 25 yen from 20 yen per share.
The broader Topix shed 0.65 point to 1,617.25, while the JPX-Nikkei Index 400 shed 8.16 points, or 0.1 percent, to end at 14,367.56.
(Reporting by Lisa Twaronite and Ayai Tomisawa; Editing by Richard Borsuk)