Tokyo - Tokyo shares fell on Wednesday morning after US president-elect Donald Trump's comment that the dollar was too strong lifted the yen - a negative for Japan's exporters.
In Asian currency markets, the greenback was trading at ¥113.07, down from ¥113.40 in Tokyo on Tuesday.
The drop was in reaction to a Trump interview, published in Monday's Wall Street Journal, in which he described the dollar as being "too strong".
Investors also grew cautious ahead of Trump's Friday inauguration, as questions swirl about his policies.
"Trump has made a lot of announcements but people are waiting for that to translate into implementation and some policy around that," Paul Harris, a fund manager at Avenue Investment Management, told Bloomberg TV.
"This is the time when you might have some slight volatility."
Dealers tend to buy Japan's currency as a safe-haven investment.
"With the yen on the rise, expectations for more upgrades in Japanese corporate earnings estimates will be toned down," said Shinichi Yamamoto, a senior strategist at Okasan Securities.
A strong yen is negative for Japanese exporters as it makes their products less competitive abroad and reduces the value of their repatriated profits.
"Volatile market moves are expected ahead of Trump's inauguration at the end of this week, with investors putting off trading activity," Yamamoto said.
The benchmark Nikkei 225 index fell.08 points, to 18 776.45 by the lunch break, while the Topix index of all first-section issues slipped 5.43 points, to 1 503.67.
Major exporters were hit, with Toyota dropping 0.08% to ¥6 713 and Sony off 1.05% at ¥3 467.
Bank shares also fell. Mitsubishi UFJ dropped 1.77% to ¥702.1 and Mizuho lost 1.29% to end the morning at ¥205.6.
Toshiba rose 3.19% to ¥290.7 after reports that the troubled conglomerate was considering spinning off its semiconductor business into a new firm and seeking an investment from US-based Western Digital, the world's largest maker of hard disks.
In other forex trading, the pound eased slightly after rallying on a much-anticipated speech by British Prime Minister Theresa May outlining details of her Brexit blueprint.
Sterling bought $1.2350 on Wednesday, down from $1.2409 the previous day.
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