[TOKYO] Japanese stocks slipped, with the Topix index set to cap a second straight monthly gain, as steel manufacturers led declines and electrical appliance makers rose.
The Topix index fell 0.3 per cent to 1,590.08 as of 9:02 a.m. in Tokyo, as all but three of its 33 industry groups dropped. It is on course for a 2 per cent advance in November. The Nikkei 225 Stock Average slipped 0.3 per cent to 19,883.72. The yen traded at 122.80 per dollar after weakening 0.2 per cent on Friday.
"Japanese stocks are overheating as they've kept rising since October," said Shoji Hirakawa, chief equity strategist at Okasan Securities Co in Tokyo. "The dollar is strong basically because a US rate hike is expected. It is positive for Japanese corporate earnings."
Japanese stocks have weathered a cooling Chinese economy and the prospect of monetary tightening by the Federal Reserve to rank among the best performers in developed countries this year. The Nikkei 225 rallied about 14 per cent in 2015.
Traders are betting there is a 72 per cent chance the Fed will raise US interest rates in December.
Investors are also weighing measures by Prime Minister Shinzo Abe to boost economic growth and drive Japan out of recession. Mr Abe on Friday ordered the compilation of an extra budget for the current fiscal year in a bid to spur growth after the economy contracted in the past two quarters.
The budget, which Abe adviser Etsuro Honda has said should be as much as 3.5 trillion yen (S$40.3 billion), will provide financial aid to pensioners.
Japan has had extra budgets to stimulate the economy in each year since at least 2012, when the main budget was augmented by an extra 3.1 trillion yen.
Government data released on Monday in Tokyo showed industrial production rose 1.4 per cent in October from a month earlier, less than economist forecasts for 1.8 per cent growth. Japanese retail sales jumped 1.8 per cent from a year earlier, beating economist estimates for a 0.9 per cent increase.
E-mini futures on the Standard & Poor's 500 Index fell 0.2 per cent after the underlying gauge added less than 0.1 per cent on Friday in a shortened trading session following the Thanksgiving holiday.