Japan's Nikkei stumbles as yen gains, mixed US peers

Losses were relatively limited, however, as investors avoided making big moves before the market entered a long holiday weekend.

The broader Topix declined 0.03% to 2728.53.

The U.S. Federal Reserve met market expectations on Wednesday, standing pat at the conclusion of its monetary policy meeting.

The central bank flagged that recent disappointing inflation readings could make rate cuts a while in coming, but chief Jerome Powell characterized the risk of more hikes as "unlikely," giving some solace to markets.

"Many investors were worried the Fed may hike (again) if inflation continued to remain high, but Fed Chair Powell suggested that the likelihood of further rate hikes is low, so I think that was assuring," said Kenji Abe, an equities strategist at Daiwa Securities.

But any relief was largely overshadowed by a surge in the yen in what traders suspect to be another round of intervention by Tokyo following the Fed's meeting.

The Japanese currency's sharp rebound weighed on export-related shares such as Toyota Motor, down 0.7%, and Honda Motor, falling 0.3%, which tend to benefit from a weaker yen.

At the same time, U.S. stocks were mixed overnight, with the Philadelphia Semiconductor Index in particular taking a hit after weak quarterly results from tech firms Advanced Micro Devices and Super Micro Computer.

The snag in the tech rally abroad capped gains by Japanese shares in the sector. Chip-related share Tokyo Electron was up 0.2%, while Advantest slid 0.7%. AI-focused startup investor SoftBank Group rose a mere 0.05%.