Tokyo stocks have fallen 0.75 per cent as the stronger yen and a slump in Sony shares overshadow data showing Japan's economy grew faster than expected in the first three months of the year.
The benchmark Nikkei 225 index slipped 107.55 points on Thursday to finish at 14,298.21, while the Topix index of all first-section shares was down 0.41 per cent, or 4.86 points, to 1178.29.
Just before the market opened, Tokyo said the economy grew 1.5 per cent between January and March, the fastest pace in more than two years fuelled by a rush in demand before a sales tax hike on April 1.
However, exporters sank as the yen climbed against the US dollar, which makes them less competitive abroad and erodes repatriated profits.
"The yen's strength was a major factor behind today's decline," said Toshikazu Horiuchi, a broker at IwaiCosmo Securities.
"The GDP figures were quite strong, but the focus has already moved to April-June figures, which are expected to fall sharply due to the consumption tax hike."
In currency markets, the US dollar fetched 101.83 yen Thursday afternoon, down from 101.87 yen late in New York and well off the 102.20 yen in Tokyo earlier Wednesday.
Sony tumbled 6.09 per cent to 1695 yen after the struggling electronics giant warned on Wednesday it would remain in the red for another year after it booked a $US1.26 billion annual loss.
Domestic rival Panasonic fell 0.73 per cent to 1087 yen, while Sharp gained 1.80 per cent to 282 yen. Both firms have recently posted annual profits after suffering years of massive losses.
US stocks finished lower on Wednesday following mixed earnings and a surprising rise in producer prices, snapping a five-day winning streak for the Dow that included three straight record closings.
The Dow fell 0.61 per cent, the S&P 500 slipped 0.47 per cent and the Nasdaq lost 0.72 per cent.
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