TOKYO: Tokyo shares closed flat on Wednesday, snapping a string of recent losses stoked by concerns over the global economy and a looming US "fiscal cliff" of spending cuts and tax hikes.
The Nikkei 225 index at the Tokyo Stock Exchange added 0.04 percent, or 3.68 points, to 8,664.73, while the broader Topix index of all first-section shares slipped 0.02 percent, or 0.15 points, at 722.41.
The day was marked by uncertainty, dealers said.
Investors reacted to a further slide in US shares that came on fears over the fiscal cliff that is approaching on January 1, Tachibana Securities market analyst Kenichi Hirano told Dow Jones Newswires.
If US politicians cannot reach a deal on deficit reduction to replace the package set to be put in place the economy will likely slip back into recession.
"Despite seven consecutive sessions of falls (in the Nikkei index), little buyback is seen," Hirano said.
"No bottom is seen for US shares yet... US lawmakers are... to negotiate to reach a compromise, which means some tax breaks will be eliminated," he said.
Fears over Europe, with Greece still awaiting crucial bailout cash and a survey pointing to worsening German investor confidence in the eurozone's biggest economy, has dented sentiment, dealers said.
The Tokyo market also reacted to speculation that Japanese Prime Minister Yoshihiko Noda would call snap elections by the end of the year, sending construction stocks higher on hopes for more public works projects.
Toyota Motor fell 0.81 percent to 3,060 yen after it issued a global recall of 2.77 million vehicles over water pump or steering problems, while watchmaker Seiko Holdings was down 10.4 percent at 172 yen after it lowered its earnings forecast for the full-year to March.
Shares in embattled electronics maker Sharp soared 7.23 percent to 163 yen following news reports it is in final talks for a cash injection of up to $500 million from US chip giant Intel.
Major contractor Obayashi rose 4.81 percent to 348 yen. (AFP)
