By Hideyuki Sano
TOKYO, Jan 21 (Reuters) - Japanese shares dropped on Tuesday, with airlines leading the decline as an outbreak of a new coronavirus has spread to more Chinese cities, stoking fears of a wider epidemic that could hamper the economic activity in the region.
Profit-taking was also ripe after the market hit a 15-month high the previous day, especially in recent gainers such as semiconductor-related shares.
The Nikkei share average .N225 fell 0.82% to 23,886.99 and the broader Topix .TOPX lost 0.56% to 1,734.46 ahead of a central bank policy meeting outcome.
Airline shares .IAIRL.T dropped 1.6% to become the worst performing sector as the virus outbreak fanned worries that it will spread globally as Chinese travellers take flights abroad for the week-long holiday starting this week.
China's health authorities said the virus can pass from person-to-person. Three other countries -- Japan, South Korea and Thailand -- have confirmed cases already. 4911.T , cosmetic maker that has benefitted from strong demand in China and from Chinese tourists, also dropped 2.5% to become the worst performer among the Nikkei constituents.
But anxiety over the virus outbreak has brought a windfall to some others.
Azearth 3161.T , a supplier of protective attire, jumped 16.2% to the day's limit, while Airtech Japan 6291.T , which manufactures air shower and other air purifying products, gained 10.6%.
Shikibo 3109.T , which produces anti-virus mask, gained 6.5%.
Elsewhere, Maeda Road Construction 1883.T soared for a second day after its parent company Maeda Corp 1824.T said on Monday it would launch an unsolicited bid to gain a controlling stake in the road builder. of more industry consolidation have helped to lift the entire sector. The Tokyo Stock Exchange's construction company index .ICNST.T rose 0.9% to a 15-month high.
On the other hand, Toshiba Machine 6104.T tumbled 8.8% as the price of a takeover bid launched by an investment fund backed by veteran Japanese activist investor Yoshiaki Murakami fell short of market expectations. shares gave in to profit-taking, with Screen Holdings 7735.T dropping 2.8%, while Tokyo Electron 8035.T lost 2.2%.
The yen ticked up 0.15% to 109.99 to the dollar JPY= as caution over the new virus lifted the safe-haven currency. A stronger yen eats into exporters' foreign earnings and profits. (Editing by Subhranshu Sahu)