Tokyo stocks fell 0.52 per cent as the yen gained strength, after the market surged the previous day on the Bank of Japan's decision to expand its lending to commercial banks.
The benchmark Nikkei-225 index, which jumped 3.13 per cent on Tuesday, lost 76.71 points to finish at 14,766.53, while the Topix index of all first-section shares slipped 0.45 per cent, or 5.48 points, to 1,218.52.
The Nikkei scored its biggest one-day gain since August after the Bank of Japan (BoJ) held off fresh monetary-easing measures but said it would tweak a loans program in a bid to stimulate lacklustre borrowing among firms and consumers.
The Tokyo market posted its best annual return in more than four decades last year. But the Nikkei is down nearly 10 per cent since the start of 2014 as a currency plunge in emerging economies and an unsteady US recovery weigh on investor sentiment.
On Wednesday, Tokyo shares faced selling pressure as nervous players booked profits following Tuesday's upsurge, while weak US data also held the market back, said Hideyuki Ishiguro, senior investment strategist at Okasan Securities.
Still, the Nikkei won a measure of support from Tuesday's BoJ announcement that signalled the bank was willing to "act when necessary" to prop up the Japanese economy, he told Dow Jones Newswires.
Future easing measures from the BoJ would tend to weaken the yen, which is good for shares of Japanese exporters who benefit from the cheaper currency.
In share trading, major exporters lost ground as the yen strengthened. Sony fell 1.79 per cent to 1,748 yen, Toyota slipped 0.58 per cent to 5,910 yen while Panasonic was down 2.38 per cent at 1,147 yen.
In forex markets, the dollar weakened to 102.20 yen, down from 102.40 yen in New York Tuesday.
Wall Street closed mostly higher Tuesday as investors weighed mixed company news and an unexpected slump in home builder confidence
The Dow Jones Industrial Average shed 0.15 per cent to 16,130.40 on Tuesday, while the broader S&P 500 index advanced 0.12 per cent to 1,840.76.
