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Tokyo stocks slipped 0.22 percent on Wednesday morning, dragged down by profit-taking and a stronger yen following a G7 statement that warned over volatility in global forex markets.
The benchmark Nikkei 225 index eased 24.67 points to 11,344.45 by the break, while the Topix index of all first-section shares was down 0.20 percent, or 1.98 points, at 966.52.
Selling pressure emerged from the outset as the yen climbed after the G7 said on Tuesday that "excessive volatility" in exchange markets hurts financial stability in a move to calm talk of currency wars before this week's G20 talks in Moscow.
Japan's policy of monetary easing has stoked fears, especially in Europe, of a so-called "currency war" between the major economies in which policymakers seek to devalue their currencies to make exports more competitive.
"The yen may be on the agenda at the G20," warned Hideyuki Ishiguro, senior strategist at Okasan Securities.
By the break, however, the Nikkei index regained part of its early loss as "there is buying on dips" from overseas and retail participants, said Hiroichi Nishi, general manager of equity at SMBC Nikko Securities.
In early afternoon Asian trade on Wednesday it took 93.17 yen to buy a dollar and 125.26 yen to buy a euro, stronger than 93.47 yen and 125.75 yen in New York on Tuesday afternoon.
The Japanese currency was much weaker on Tuesday morning, with the dollar trading above 94 yen and the euro above 126 yen.
The euro bought $1.3447, up from $1.3404 in US trade.
Exporters lost ground in the morning as Sony dropped 4.99 percent to 1,312 yen while Toyota lost 0.81 percent to 4,880 yen.
Olympus fell 1.63 percent to 2,043 yen after the scandal-hit camera and medical equipment maker on Tuesday cut its full-year earnings forecast citing weak demand for digital cameras.
-- Dow Jones Newswires contributed to this report --