Japan's Nikkei ends lower as investors book profits; chip-related shares weigh

TOKYO, Jan 9 (Reuters) - Japan's Nikkei share average closed lower on Thursday as investors sold stocks to book profits after a recent rally, with chip-related shares dragging on the index the most.

The Nikkei .N225 fell 0.94% to close at 39,605.09, while the broader Topix .TOPX slipped 1.23% to 2,735.92.

"The Nikkei has risen to a level that prompted investors to sell stocks to secure profits," said Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management.

"Investors need new market moving-cues to believe that the Nikkei will rise further and that would be the domestic corporate outlook."

The Nikkei crossed 40,000 to hit a five-month high of 40,398.23 on Dec. 27, 2024, but has failed to breach that level since then.

Chip-related stocks led the declines on the day, with Tokyo Electron 8035.T and Advantest 6857.T falling 1.83% and 2%, respectively.

Toyota Motor 7203.T fell 2.21% to drag the Topix the most.

"With the U.S. markets being closed later in the day, investors were cautious and the index was hovering near the bottom end of the recent trading range," said Takehiko Masuzawa, trading head at Phillip Securities Japan.

U.S. stock markets will be closed on Thursday for a national day of mourning to mark the death of former President Jimmy Carter.

All but three of the Tokyo Stock Exchange's 33 industry sub-indexes fell, with the shipping sector .ISHIP.T losing 4.9% to become the worst performer.

The union representing 45,000 dock workers on the U.S. East and Gulf Coasts and their employers reached a tentative deal on a new six-year contract, averting a strike that could have raised shipping freight fees.

Kawasaki Kisen 9107.T, Nippon Yusen 9101.T and Mitsui OSK Lines 9104.T fell more than 5% each.

Of the more than 1,600 stocks trading on the TSE's prime market, 20% rose, 77% fell and 2% traded flat.

(Reporting by Junko Fujita; Editing by Mrigank Dhaniwala and Sumana Nandy)

((junko.fujita@thomsonreuters.com;))