Nikkei declines continue: The Nikkei share average in Japan is on track for its third consecutive day of declines on Wednesday, with investors closely monitoring the upcoming Bank of Japan (BOJ) monetary policy meeting.

At midday, the Nikkei .N225 was down 0.42 per cent at 38,636.12, slipping after briefly crossing the significant 39,000 mark.

Meanwhile, the broader Topix .TOPX was down 0.39 per cent at 2,646.99.

BOJ policy anticipation

Traders are exercising caution ahead of the BOJ's policy gathering, with many anticipating a potential shift in short-term interest rates from negative territory, either in the upcoming week or by April.

Among the leading index components, Tokyo Electron 8035.T, a major chip-making equipment firm, saw a 1 per cent increase, followed by a 0.8 per cent rise in Honda Motor 7267.T.

However, 140 out of the 225 constituents of the index saw declines, with prominent shares such as SoftBank Group 9984.T, down 0.8 per cent, and Fast Retailing 9983.T, the parent company of Uniqlo, which dropped 0.3 per cent, offsetting early gains.

Heavyweight losses were led by electrical equipment manufacturer Daikin Industries 6367.T, which saw a 2.6 per cent decline.

Yen strengthens, exporters struggle

The yen saw some strengthening during the Asian morning, putting pressure on exporters who benefit from a weaker currency. Traders are awaiting the initial outcomes of the closely watched spring wage negotiations, set to be released on Friday.

Toyota Motors 7203.T experienced about a 1 per cent decline.

Maki Sawada, a strategist at Nomura Securities, highlighted, "If a higher rate of wage increases than last year is confirmed, views that the BOJ will exit from negative interest rates at the March meeting will strengthen," adding that "the appreciation of the yen against other currencies will likely weigh on stock prices" in such a scenario.

(With Reuters Inputs)