TOKYO, June 10 (Reuters) - Japanese shares closed nearly flat on Wednesday, ending just below a three-month high hit earlier this week, as investors paused to take stock of the market that rose on hopes of a swift recovery from a coronavirus-led downturn.
"The market has been recovering but many people are concerned about the outlook. Given the current stretched valuations, we could see a correction in the near term," said Masato Futoi, deputy general manager of institutional sales at Tokai Tokyo Securities.
With the Topix trading at 16 times expected earnings over the next 12 months, the highest level in seven years, some Japanese players were taking profits ahead of the U.S. Federal Reserve's policy meeting later in the day.
Takara Bio 4974.T rose 17.5%, by daily limit, to a seven-year high after the Japanese biotechnology firm said it has developed a method to speed up PCR tests for COVID-19.
The parent company Takara Holdings 2531.T was the best performer on the Nikkei, with gains of 9.9%.
Shares in the Tokyo Stock Exchange's Mothers start-up market also outperformed, with its index .MTHR rising 1.5% after hitting a 1-1/2-year high. the other hand, many of value shares - those with relatively cheap valuations - underperformed following stellar gains in the past couple of weeks.
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