Bank of America Merrill Lynch said in its fund manager survey that as the dollar-yen was sold off and global investors became more concerned about prospects for the global economy, their Japan equity allocation fell to net minus 1 percent in January, the first minus figure since 2016.
Among them were cosmetic firms, with Shiseido tumbling 2.4 percent, nearly offsetting Tuesday's 2.7 percent gains.
Rival Kose dropped 3.5 percent despite a local media report that its April-Dec profits are seen hitting a record for that period.
Shippers dropped 1.2 percent while Murata Manufacturing, a big supplier to Apple, dropped 3.0 percent, after a 5.3 percent jump the previous day.
Investors also took profits from other recent gainers. Hitachi fell 2.6 percent after a 16 percent surge in the previous two days, helped by a media report the firm is considering withdrawing from nuclear plant business. Market analysts said that although overly pessimistic views for the global economy have receded somewhat compared to last month, there are still underlying concerns.
"The market has rebounded from its low last month as investors look to positive catalysts, such as developments in US-Sino trade talks," said Yutaka Miura, a senior technical analyst at Mizuho Securities.