Japan's Nikkei average was nearly flat on Friday with Nippon Steel Corp. and other steel shares advancing following strong output data, but gains were limited as KDDI Corp tumbled on price war fears.
Hoya Corp., a Japanese high-tech glass maker set to seal its takeover of Pentax, fell nearly 5 percent after posting a 16.9 percent decline in quarterly profit.
Investors sold Mitsubishi Estate Co. Ltd. and other property stocks with high valuations and bought steel, trading firms and machinery stocks that have lower valuations as well as profit prospects.
The stocks with high price-to-earnings ratios are shunned. Investors are sticking to a traditional way of investing, that is to buy stocks with cheap valuations and with profit potential, said Toru Otsuka, deputy general manager at Mizuho Investors Securities Co. Ltd.
The benchmark Nikkei average inched up 8.17 points or 0.05 percent, to 18,124.74 as of 0442 GMT. It logged the highest finish for the year at 18,300.39 on February 26. The broader TOPIX index added 0.16 percent to 1,770.85.
Shares of Nippon Steel, the world's second biggest steel maker, climbed 3.4 percent to 950 yen, making it the most actively traded share on the main board, after data showed on Thursday Japan's crude steel output in January-June hit a record high for the first time in 33 years on strong demand from Japanese car and other manufacturers.
Nippon Steel's rival JFE Holdings Inc. too gained 3.8 percent to 8,580 yen.
Concern about price wars put telecoms stocks under pressure as KDDI on Thursday slashed its basic monthly fee, prompting Softbank Corp. to follow suit.
KDDI plunged 6.7 percent to 847,000 yen and Softbank declined 2.6 percent to 2,670 yen.
Property stocks were down with Mitsubishi Estate falling 4.4 percent to 3,040 yen and Mitsui Fudosan Co. Ltd. dropping 3.9 percent to 3,220 yen. Still, both stocks are trading at higher multiples and Mitsubishi Estate carries a PE of about 50 and Mitsui Fudosan has 33, compared with an average PE of 20 for the Nikkei 225 components.