Tokyo shares closed lower Wednesday as weakness in commodity-sector shares and a selloff of real estate stocks stalled a two-day rally, despite continued strength in financial stocks and gains at Matsushita Electric Industrial.

The Nikkei 225 Stock Average fell 44.38 points, a 0.3% loss, to 13849.99 following a 30.90-point gain Monday. Japanese markets were closed for a public holiday on Tuesday.

The Topix index of all the Tokyo Stock Exchange First Section issues shed 3.10 points, or 0.2%, to 1358.65.

Analysts said investors are waiting to see the direction of interest rates in the U.S. later today following a decision by the Federal Open Market Committee. Most investors are bracing for a 25 basis point cut and are looking to see where rates go from there.

Investors are going to look at the tone set by the U.S. Fed but the strength in the dollar has been one reason we're seeing a cool-off in trading houses and other commodity stocks, said Akio Yoshino, market economist at Societe Generale Asset Management in Tokyo.

Commodity sector companies were notable losers, hit by lower raw material prices as the dollar continued to strengthen. Oil and metal prices are generally priced in dollars and traders say some of the recent decline in these commodities was due to a strengthening dollar in the run-up to a decision on U.S. interest rates due later in the global day.

Oil refiner Nippon Oil shed 5.8% to Y713 and trading house Mitsubishi Corp., which has sizable natural resource investments, fell 3.2% to Y3,340.

Real estate stocks were among the day's decliners, following a number of rating cuts of major developers by Credit Suisse. Mitsubishi Estate stumbled 4.1% to Y3,020 while Sumitomo Realty & Development dropped 2.9% to close at Y2,600.

Matsushita Electric Industrial though soared 15% to Y2,445 as investors cheered surprisingly strong January-March results from the consumer electronics conglomerate and news that it would buy back up to 50 million of its own shares.

Matsushita said quarterly profit jumped to Y61.6 billion in the first quarter of this calendar year from Y23.4 billion year earlier. A slew of ratings upgrades from brokerages also added to the stock's outperformance.

Softbank added 2.2% to Y2,100 on news that the company would purchase up to a 40% stake in Chinese Internet firm Oak Pacific Interactive for about Y40 billion.

Financial stocks continued to tear upwards, extending their rally into a third consecutive session as investors warmed to the beaten down sector on expectations of higher interest rates in Japan and an end to turmoil in global credit markets.

Daiwa Securities Group, which posted its January-March quarter earnings figures on Monday, surged 5.2% to Y1,031. Like many other financial firms, Japan's second largest brokerage by revenue reported a group net loss for the period.