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Tokyo stocks slipped 0.28 percent Tuesday morning as a stronger yen weighed on sentiment despite a positive performance from shares on Wall Street.
The Nikkei 225 index at the Tokyo Stock Exchange was down 38.36 points to 13,530.01 by the break while the Topix index of all first-section issues sank 0.22 percent or 2.55 points to 1,143.05.
The dollar fell further Tuesday, disappointing those who had hoped it would soon hit the 100-yen mark after last week's Group of 20 economic powers' meeting, traders said.
"A temporary resurgence in the yen is holding the market back thus far," said Tatsunori Kawai, chief strategist at kabu.com Securities.
"But the overall trajectory is still lower, so it's likely to be just a matter of time before the dollar reaches the 100-yen mark," he told Dow Jones Newswires.
"Corporate earnings reports are becoming more the focus now, but results are not going to reflect the fuller impact of 'Abenomics' for another two quarters," he said.
Prime Minister Shinzo Abe's push for active government spending and demand for aggressive monetary easing has been dubbed "Abenomics", boosting stock prices and sending the yen tumbling.
A weak yen is a boon to Japanese exporters as it makes their products more competitive and increases their income when repatriated.
The dollar was changing hands at 98.89 yen in Tokyo midday trade from 99.35 yen in New York late Monday.
The euro, which edged higher Monday after Italy re-elected its president in a move towards greater political stability, bought $1.3047 and 129.08 yen from $1.3062 and 129.77 yen in US trade.
In Tokyo trade in individual stocks, some leading exporters fell with Canon losing 0.39 percent to 3,765 yen.
Panasonic fell 0.98 percent to 706 yen after a report in the Nikkei business daily that it will cut about 600 jobs or 20 percent of the domestic workforce at its flagging lithium ion battery operations.
Heavy industries firm IHI was up 1.11 percent to 362 yen after it said Monday that its group net profit likely jumped 39 percent on-year in the year ended in March thanks to a lower yen and smaller book loss on stocks holdings.
US stocks rose Monday amid mixed earnings reports, with the Dow Jones Industrial Average gaining 19.66 points (0.14 percent) to 14,567.17.