Japan's Nikkei pulls back from 3-decade high, but tech stocks march ahead

TOKYO, Jan 15 (Reuters) - Japan's benchmark Nikkei stock average inched lower on Friday after rising for five straight sessions to hit a three-decade high, although losses were capped by tech-related shares after Taiwanese chipmaker TSMC posted its best-ever quarterly profit.

The Nikkei eased 0.25% to 28,626.08 by 0154 GMT, while the broader Topix fell 0.50% to 1,863.94. However, the Nikkei was up 1.7% for the week, on track for a third straight weekly gain.

"The market started slowing down at the end of yesterday's session as investors felt the overheat in the market," said Norihiro Fujito, chief investment strategist, Mitsubishi UFJ Morgan Stanley Securities.

"But this is a very limited decline. The market is supported by solid demand for chip shares on the back of robust earnings from TSMC."

Taiwan Semiconductor Manufacturing Co Ltd (TSM) posted its best-ever quarterly profit on Thursday and raised revenue and capital spending estimates, pushing the Philadelphia semiconductor index to a record high.

That gave an additional boost to Japanese chip shares which were already in solid demand, Fujito said.

Tokyo Electron (TOELF) rose 4.5%, Advantest (ADTTF) gained 4.25%, Sumco (SUMCF) added 3.16%, and Renesas Electronics (RNECF) climbed 1.46%.

Canon was the top gainer in the Nikkei 225 with a jump of 7.47%, after the company raised its profit forecast for the year just ended to well above analysts' estimates.

Japanese stocks also tracked the U.S. market, which ended lower on Thursday ahead of President-elect Joe Biden's announcement of a stimulus package designed to jump-start the economy.

Fast Retailing (FRCOF) fell 3.17%, even after it said its first-quarter operating profits were higher than the pre-pandemic levels.

Automakers also slipped. Subaru shed 2.34% after it became the latest car maker to cut production due to a global shortage of semiconductors. Toyota Motor (TM) fell 1.72%, while Honda Motor (HMC) declined 2.62%. (Reporting by Junko Fujita in Tokyo; Editing by Subhranshu Sahu)

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