TOKYO, Nov 18 (Reuters) - Japanese shares closed lower on Wednesday, with the Nikkei retreating from a more than 29-year closing high notched a day earlier, as soaring COVID-19 cases in Tokyo halted a recent equity rally fuelled by vaccine optimism.
The benchmark Nikkei share average .N225 dropped 1.1% to 25,728.14, its biggest daily loss since Oct. 30.
The index, which has gained nearly 12% so far this month, posted its highest close since 1991 on Tuesday.
The broader Topix .TOPX lost 0.81% to 1,720.65.
Both of the indexes extended their losses in the afternoon as market sentiment soured after local media reported that Tokyo hit a new single-day record of 493 coronavirus infections on Wednesday. in the day, the Nikkei business daily reported that Tokyo was preparing to raise its COVID-19 alert level to the highest of four levels. stocks also tracked Wall Street lower as surging COVID-19 cases, the growing threat of a fresh round of economic lockdowns and weak retail sales data dampened the euphoria caused by potential vaccine breakthroughs. .N
All but two of the 33 sector subindexes on the Tokyo exchange traded lower, with highly cyclical non-ferrous metals .INFRO.T , airlines .IAIRL.T and shippers .ISHIP.T leading the decline on the main bourse.
Analysts said a sense of short-term overheating on the Nikkei and a stronger yen also prompted investors to book profits, sending export-oriented companies such as Toyota Motor Corp 7203.T , Sony Corp 6758.T and Honda Motor 7267.T between 1.61% and 3.78% lower.
Separately, the company's chief executive officer, Masayoshi Son, said at the New York Times-hosted DealBook Online Summit that he was sitting on about $80 billion in cash for investments and share buybacks. Mothers Index .MTHR of start-up firm shares bucked the overall sombre mood, closing 0.62% higher.
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