The Nikkei gave up earlier gains to close down 18.96 points at 11,582.72. It fell 0.38 percent on Wednesday after hitting its highest close since July 2 in the previous session.
The broader TOPIX index fell 0.26 percent to 1,161.93.
Analysts said sentiment remained solid nonetheless. Earnings optimism lifted Tokyo Electron Ltd and other chip stocks, helping to keep the market from falling far.
"Buying by foreigners, notably in the Middle East and Europe, is supporting the market and boosting liquidity," said Takahiko Murai, general manager of equities at Nozomi Securities. "They see Japan as one of the most promising markets given that the outlook for its economy is relatively good.
Sumitomo Realty, which on Tuesday halved its group net profit target for the year to March, tumbled 2.7 percent to 1,345 yen.
Mitsui Fudosan Co Ltd fell 2.5 percent to 1,282 yen. Its shares hit a 10-month high on Tuesday.
Japan's biggest non-life insurer, Millea Holdings Inc, tumbled 2.6 percent to 1.51 million yen.
The market was shaken before the opening bell as orders for Japanese stocks placed through 12 foreign securities houses showed an intention to sell a net 31.8 million shares, the largest net selling since April 30 last year.
That fanned worries that foreign investors had changed their buying stance on Japanese stocks after the GDP data showed Japan is in its fourth recession in less than a decade.
Nippon Oil, Japan's top refiner, gained 1.5 percent to 745 yen while oil producer and refiner AOC Holdings Inc rallied 5.8 percent to 1,396 yen after crude prices surged above $48 a barrel on worries about a possible output cut by the Organisation of Petroleum Exporting Countries (OPEC) this spring.
Tokyo Electron Ltd, the world's second-biggest supplier of chip-making tools, rose 1.1 percent to 6,610 yen, its highest close since April 30.
Advantest Corp, the world's largest maker of chip-testing equipment, added 0.3 percent to 9,110 yen. Electronics parts maker Alps Electric Co, whose earnings this week beat market expectations, gained 1.4 percent to 1,554 yen.