(corrects day of week in lead and to show it hit intra-day high on Wednesday, not closing high, in second paragraph)
By Hideyuki Sano
TOKYO, Dec 22 (Reuters) - Japanese stocks edged down from one-year highs on Thursday as investors took profit from recent gainers such as financials in otherwise thinning trade ahead of the holiday season.
The Nikkei share average dropped 19,391.51, down 0.3 percent on Wednesday, when it hit one-year highs.
“Trading volume is falling with many foreign players going away ahead of the Christmas. And without them, there are few players who are ready to chase the market higher. So it is natural to see some retreat,” said Masahiro Ayukai, senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities.
Still, the Nikkei has risen almost 18 percent so far this quarter as expectations of higher U.S. growth and inflation under the incoming U.S. President Donald Trump have driven down the yen, boosting Corporate Japan’s earnings prospects.
Data from the Ministry of Finance showed foreign investors have been net buyers of Japanese stocks last week for the sixth consecutive week.
Investors took profits in financials, which had risen sharply thanks to gains in global bond yields since Trump election win last month.
Bank shares fell 1.7 percent, with Mitsubishi UFJ Financial Group down 1.9 percent and Sumitomo Mitsui Financial Group slipping 1.8 percent. Insurers also dropped 1.2 percent.
Banks were also not helped by concerns over the darkening outlook of ailing Monte dei Paschi di Siena, Italy’s third largest lender.
On the other hand, many exporters shares were supported as the yen remained relatively close to its 10-1/2-month low against the dollar hit last week. It last stood at 117.60 per dollar, compared to last week’s low of 118.66.
The broader Topix dropped 0.3 percent to 1,539.97 while the JPX-Nikkei Index 400 eased 0.3 percent to 13,806.32.
The index of Tokyo Stock Exchange’s mostly small-cap second section shares also dropped after having risen above their 2015 peak to hit highest level since 2006 the previous day. (Reporting by Hideyuki Sano; Editing by Shri Navaratnam)