Japan's Nikkei retreats from 6-week high as investors lock in gains

Japan's Nikkei 225 closed lower on Friday, slipping 0.79% to 68,413.03 after pulling back from a six-week high as traders took profits. Business Recorder reported the index was still set for a 3% weekly gain. The broader Topix also eased, shedding 0.57% to 4,108.53.

Caution returned as traders weighed rate expectations, price pressures and geopolitical threats, even though US stocks closed higher overnight and Treasury yields eased from multi-decade highs. Tokyo's core inflation picked up in September to a 10-month high, which strengthened the case for more rate hikes. Energy markets were also unsettled by the US-Iran war and China's decision to halt refined oil shipments, apart from those bound for Hong Kong and Macau.

Yuta Okamoto, an analyst at Tokai Tokyo Intelligence Laboratory, warned that overheating concerns could lead to profit-taking after Thursday's 3.3% rally. He nonetheless remained positive on domestic shares, pointing to the Bank of Japan's tankan survey, which showed large manufacturers' sentiment improving for a sixth straight quarter.