Tokyo stocks closed almost unchanged Tuesday as investors awaited the outcome of a two-day US monetary policy meeting and talks aimed at averting the "fiscal cliff".
The benchmark Nikkei 225 index edged down 0.09 percent, or 8.43 points, to 9,525.32, while the broader Topix index of all first-section shares fell 0.31 percent, or 2.41 points, to 786.07.
Analysts say stubbornly high unemployment and the looming fiscal cliff package of tax rises and spending cuts give the US central bank more reasons to expand its stimulus efforts after its meeting starting later Tuesday.
"There is some selling and shorting of exporter shares in anticipation of more US Fed easing pressure," said an equity trading director at a foreign brokerage.
"The consensus seems to be that whatever the Fed does, it will be more aggressive than what we've already seen."
In Tokyo trade, Honda dipped 1.16 percent to 2,713 yen and Sony fell 1.46 percent to 808 yen.
Chipmaker Renesas Electronics rose 0.32 percent to 309 yen after saying late Monday it would raise up to $2.43 billion as part of a government-backed rescue plan to shore up its troubled balance sheet.
Sharp jumped 6.86 percent to 218 yen on reports that a trio of Japanese banks may lend the cash-strapped electronics retailer 40 billion yen ($486 million) as it tries to repair its dented balance sheet.
Fast Retailing, operator of the Uniqlo cheap chic clothing chain, rose 1.13 percent to 19,640 yen, a new high for the year on optimism over strong winter sales as a cold snap sweeps across Japan.
Power company shares plunged after experts said one of the nation's nuclear plants may sit on an active seismic fault, raising fears it would have to be scrapped. Anti-nuclear sentiment runs high following last year's atomic crisis.
"This doesn't come as a total surprise, as talk of a fault has been in the market," Chibagin Asset Management general manager Yoshihiro Okumura told Dow Jones Newswires.
"But in a...mothballing scenario, the burden on the other utilities would certainly not be light."
Kansai Electric Power tumbled 4.38 percent to 742 yen while Chubu Electric Power fell 4.05 percent to 1,041 yen.
Tokyo Electric Power, operator of the crippled Fukushima Daiichi plant that was at the centre of last year's crisis, gave up 1.42 percent to 138 yen.
On currency markets, the euro bought $1.2952 and 106.65 yen, from $1.2939 and 106.53 yen in New York late Monday.
The dollar bought 82.37 yen, against 82.33 yen in US trading.