Tokyo shares erased earlier gains to close lower, as investors sold off shares of the country’s leading exporters amid the yen’s continued strength against the dollar.

The benchmark Nikkei 225 average closed down 0.2 per cent at 10,964.87, while the broader Topix index was down 0.2 per cent at 1,100.33.

The yen was hovering at Y105.6 against the dollar Tuesday afternoon, weakening slightly from a seven-month high of Y105.3 reached on Monday. Shares of Japan’s leading exporters were broadly lower, as investors worried about the yen’s potential impact on profits and revenues.

Shares of Sony were down 0.8 per cent to Y3,740, Canon was off 1.1 per cent at Y5,320 and Fujitsu was 0.5 per cent lower at Y639. Toshiba lost 0.7 per cent at Y438.

Shares of Mazda, the Japanese carmaker, rose 1.9 per cent to Y328, after the company reported half-year earnings that beat its own forecast and raised its full-year forecast, buoyed by robust sales of its Mazda3 model car.

Shares of Honda were up 0.6 per cent to Y5,320 after the carmaker on Monday announced it would quadruple production at its plant in Wuhan, China, by 2006.

Elsewhere, shares of Japan’s leading shipping companies were higher following a report in the Nihon Keizai Shimbun that they would report record operating profits in the year to next March, boosted by higher freight rates.

Shares of Mitsui OSK, Japan’s second-leading shipping firm, were up 2.3 per cent to Y631. Rival Kawasaki Kisen Kaisha was up 0.9 per cent to Y708, but Nippon Yusen shed 1.9 per cent to Y543.

Shares of Bookoff, Japan’s leading used bookstore chain, were up 5.9 per cent to Y1,810 after UBS began covering the stock with a “buy 2” rating and set a target price of Y2,300. UBS said Bookoff’s main market could double in size in the next 10 years, as consumer attitudes toward used books begin to change.

Shares of Mitsubishi Motor, the beleaguered carmaker, closed down 6.3 per cent to Y105 after the company on Monday widened its full-year net loss projection. For the half-year ended September, the carmaker reported a net loss of Y91.5bn, worse than its original forecast of a loss of Y29.1bn. It emerged earlier this year that MMC had covered up evidence that some of its vehicles had faulty parts, causing its top management to step down.

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