Japanese stocks edged lower Wednesday for a second straight session, led by real estate and utility shares.
The Nikkei 225 index fell 28.14 points, or 0.16 percent, on the Tokyo Stock Exchange to finish at 17,732.77 points. The index fell 0.41 percent Tuesday.
Interest-rate sensitive sectors such as real estate led the decline. Wall Street fell overnight on fears of rising interest rates in the U.S.
Decliners included Mitsui Fudosan Co., which fell 1.94 percent to 3,540 yen (US$29.02), and Tokyo Electric Power Co., which slipped 0.77 percent to 3,860 yen (US$31.64). Nonferrous metal shares also declined, with Mitsubishi Materials Corp. dropping 1.82 percent to 646 yen (US$5.30).
Traders and investors are awaiting an outcome of a two-day policy board meeting by the Bank of Japan starting Thursday.
"The BOJ's decision on a rate hike is very important for the Japanese market, both in the near-term and long-term," said Masahiro Yahagi, sales trader at CLSA Asia-Pacific Markets in Tokyo.
The broader Topix index, which includes all shares on the exchange's first section, lost 5.70 points, or 0.33 percent, to 1,745.92 points. The Topix shed 0.54 percent the previous day.
The U.S. dollar was trading at 122.18 yen at 2:50 p.m. (0550 GMT) Wednesday, up from 121.82 yen late Tuesday in New York. The euro fell to US$1.3312 from US$1.3318.