Nikkei in focus: Japan's Nikkei share average dipped on Thursday as investors opted to cash in on profits following the index's recent record highs.

The Nikkei fell 0.65 per cent to 38,953.49 during the midday break, marking its first descent below the 39,000 mark since February 22.

The broader Topix also declined by 0.62 per cent to 2,658.26.

Naoki Fujiwara, senior fund manager at Shinkin Asset Management, noted that investors were capitalizing on the recent rally in the Nikkei but observed ongoing interest in buying opportunities, particularly in smaller stocks.

The Nikkei retraced slightly on Wednesday from its all-time high, a move attributed to technical indicators signaling a rapid 9 per cent surge over the past three weeks.

Among notable declines on Thursday, SoftBank Group, a technology investor, dropped 1.39 per cent, while ceramics maker Kyocera lost 1.5 per cent.

Further dampening sentiment were recent figures from the finance ministry revealing that foreign investors turned net sellers of Japanese stocks during the week when the index hit its peak.

Foreign investors divested 200 billion yen ($1.33 billion) worth of Japanese stocks in the week ending February 24, ending a seven-week buying streak.

In contrast to the overall trend, Aozora Bank surged 9.44 per cent after public disclosure indicated that activist fund City Index Eleventh holds a 5.42 per cent stake in the Tokyo-based bank.

Meanwhile, Seven & i Holdings climbed 4.83 per cent following reports suggesting the convenience store chain operator's consideration of selling a supermarket unit to investment funds, a claim later refuted by a company spokesman.

Shipping firms, despite experiencing a 2.7 per cent decline earlier in the week, saw a 1.29 per cent increase, emerging as the top performer among the Tokyo Stock Exchange's 33 industry sub-indexes.

(With Reuters Inputs)

The broader Topix also declined by 0.62 per cent to 2,658.26.

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