The Nikkei share average edged up 0.20 percent on Wednesday as Advantest Corp. and other chip stocks rose but consumer loan companies such as Credit Saison Co. fell on a report of tighter accounting rules.
Metal stocks extended losses on lower commodity prices, while Fuji Photo Film Co. rose on its plan to launch cosmetics and vitamin supplements from this month.
Investors are inclined to sell holdings to lock in profits ahead of first-half book closings at the end of this month, and they stopped short of pushing prices higher, said Hiroyuki Fukunaga, chief strategist at Rakuten Securities' research division.
Investors have usually bought stocks on dips but now they are closing their books and need to take profits, he said. It will also take time for new money for the second half of the business year to come into the market.
The Nikkei rose 30.71 points to 15,750.05, after hitting a one-month closing low on Tuesday. The broader TOPIX index was down 0.15 percent at 1,583.55.
Shares of exporters such as technology and auto makers may have regained investors' confidence following a rally in the U.S. retail sector, which was partly triggered by a better-than-expected quarterly profit at Best Buy Co., the top U.S. electronics chain, said Tomomi Yamashita, senior fund manager at Shinkin Asset Management Co. Ltd.
People have thought that the Japanese economy is strong and that exporters face some risks from a possible slowdown in the United States, he said. But now investors seem to be changing their minds. It looks as if they are rushing to buy exporters, especially after a strong performance in the U.S. retail sector.
The technology sector, mainly semiconductor shares, was lifted by gains in its U.S. counterparts, which were boosted as Credit Suisse raised its rating on the chip equipment sector to overweight from market perform and upgraded Applied Materials Inc. to outperform from neutral.
Advantest, the world's largest supplier of tools used to test microchips, rose 3 percent to 11,590 yen and Tokyo Electron Ltd.
, the world's second-largest supplier of chip-making tools, jumped 4 percent to 8,300 yen.
Chip maker NEC Electronics Corp. surged 8.2 percent to 4,360 yen and Elpida Memory Inc. soared 6.6 percent to 5,660 yen, after earlier hitting an all-time high of 5,760 yen.
SUMCO Corp., the world's No. 2 silicon wafer maker, chalked up a 5.2 percent gain to end at 8,360 yen after it said on Tuesday its first-half net profit grew more than fivefold and it raised its full-year forecast above the market consensus thanks to strong demand for silicon wafers.
Fuji Photo Film added 2.1 percent to 4,370 yen, helped by its plan to tap into the cosmetic market.
CONSUMER LENDERS RING UP LOSSES
Consumer loan companies were hit after the Nihon Keizai Shimbun reported the Japanese Institute of Certified Public Accountants will call on consumer loan companies to increase their provisions so that they are better prepared for future obligations to return overpaid interest to borrowers.
Credit Saison, leading consumer credit firm and largest in credit cards among retail companies, lost 4.3 percent to 4,940 yen.
Aiful Corp., the biggest consumer loan firm, dropped 3.3 percent to 4,730 yen and Takefuji Corp. declined 3.4 percent to 5,940 yen.
Accounting is a sensitive issue for many investors following a series of accounting problems at Japanese firms, said Takahiko Murai, general manager of equities at Nozomi Securities.
Investors are already concerned about accounting practices at Japanese companies to begin with, he said.
Murai also said the sector has been already under pressure from rising interest rates, since many consumer loan companies borrow funds from banks to extend loans to consumers.
Other losers included metal stocks, which came under pressure as the commodity market fell, with Toho Zinc Co. Ltd. down 3.6 percent to 906 yen and Sumitomo Metal Mining Co. Ltd, Japan's top gold producer, shedding 4.4 percent to 1,525 yen.
Trade slowed from the previous day, with 1.75 billion shares changing hands on the Tokyo exchange's first section, still higher than the daily average of 1.68 billion shares in August.
Decliners outpaced gainers 1,200 to 406.