Tokyo stocks slipped 0.61 percent on Thursday morning, tracking losses on Wall Street after US data showed the world's biggest economy unexpectedly shrank in the last quarter of 2012.
The benchmark Nikkei 225 index eased 67.71 points to 11,046.24 by the break, while the Topix index of all first-section shares was down 0.10 percent, or 0.90 points, at 933.77.
The Nikkei's losses come a day after it soared 2.28 percent to its highest close in nearly three years thanks to a weaker yen, dealers said.
Dealers took a cue from Wall Street, where the three main indexes fell after the Commerce Department said the world's biggest economy contracted 0.1 percent in the October-December period.
The Dow, which closed near a record high on Tuesday, slipped 0.32 percent.
However, SMBC Nikko Securities general manager of equities Hiroichi Nishi,said: "The numbers will likely be treated as a bit of a one-off, as they masked stronger consumer and business spending and progress in the housing recovery."
Just before the opening bell official data was released showing industrial output for December rose 2.5 percent from the previous month thanks to brisk production of cars and semiconductors.'
However, while the government said the figure indicated the sector had bottomed out, it missed market expectations of a 4.0 percent expansion, while over the full year, output slipped 0.3 percent.
Eyes are also on the release of corporate results later in the day, with major firms due to report including Honda, All Nippon Airways (ANA), Nomura Holdings, Toshiba and mobile carrier Softbank.
Videogame giant Nintendo tumbled 5.02 percent to 8,880 yen after saying Wednesday it returned to profit in the nine months to December, but warned it was chopping its sales expectations for the new Wii U games console.
In currency markets, the dollar edged down to 90.83 yen from 91.05 yen in New York late Wednesday, while the euro was quoted at 123.23 yen from 123.54 yen. The single currency was flat at $1.3564.