(REUTERS) - The Nikkei share average ended lower on Wednesday, reversing two days of gains on profit-taking as investors remained cautious over new developments in the Eurozone debt crisis and looked to data later in the week.
Strategists said the Nikkei was likely to tread water near 8,400 as investors await U.S. and Chinese manufacturing data on Thursday and U.S. employment data on Friday.
Weakness in Asian shares weighed on Tokyo stocks as well as talk that efforts to get the IMF to help Europe may be hitting a snag, said Masato Futoi, head of cash trading at Tokai Tokyo Securities. But in general, trade is a bit thin and people are using these factors as an excuse to sell.
The benchmark Nikkei ended the day down 0.5 percent at 8,434.61, and lost 6.2 percent in November. The broader Topix index shed 0.2 percent on the day to 728.46. MSCI's broadest index of Asia Pacific shares outside Japan fell 9.1 percent in November.
European finance ministers agreed on Tuesday to strengthen the European Financial Stability Facility (EFSF) and said they are consulting with the IMF about more aid as bond yields surge across the region.
Some market participants took heart from the agreement, while others remained cautious about IMF involvement.
New developments in Europe may be encouraging for some, but the turmoil will continue, said Toshiyuki Kanayama, a senior market analyst at Monex Inc.
Standard & Poor's downgrade of 15 major U.S. and European banking firms, including Bank of America and Goldman Sachs, after the Wall Street close also weighed on the market. S&P also cut its ratings outlook for Mizuho Financial Group and Sumitomo Mitsui Financial Group (SMFG) to negative from stable. Mizuho and SMFG shares both fell 1 percent.
Market participants were shocked by the banks' ratings downgrade and they think New York will drop overnight, said Fumiyuki Nakanishi, a strategist at SMBC Friend Securities. OLYMPUS REMAINS IN FOCUS
Trading volume climbed to a three-week high, with 1.76 billion shares changing hands on the Tokyo Stock Exchange's main board, up from 1.57 billion shares on Tuesday. Declining shares outnumbered advancing issues 833 to 689.
Troubled Olympus Corp fell more than 12 percent in heavy morning trade after the Wall Street Journal reported that the camera and endoscope maker might not meet the Dec. 14 deadline to file its updated financial results.
An Olympus spokeswoman later denied the report and the stock reversed losses, closing up 2.2 percent at 1,025 yen, continuing what traders call a money game of speculative trading. It was the second-heaviest traded share by turnover on the main board.
Pioneer briefly hit a three-month high before closing up 6.7 percent at 368 yen, benefiting from hopes for an earnings recovery from the impact of flooding in Thailand.
SBI Holdings rose 7.2 percent to 6,080 yen after the venture capital firm said on Tuesday it would buy back up to 370,000 of its own shares for as much as 2 billion yen. Kanamoto, a leaser of construction machinery, rose 6.2 percent to 494 yen after raising its operating profit estimate for the year ended Oct. 31, citing stronger demand for construction machinery due to rebuilding in quake-stricken areas.
Japan Communications Inc soared 14.8 percent to 8,700 yen after the Nikkei business daily said the company plans to enter a joint venture with Marubeni Corp to offer low-cost wireless data services to businesses. Marubeni dropped 0.9 percent to 461 yen.