Japan's Nikkei share average dipped after failing to top the key 9,500 level on Tuesday, while Mazda Motor Corp shed nearly 10% on a report that it will raise $2 billion through a share issue and loans to shore up its finances.
Underpinning market sentiment, however, was the long-awaited approval of Greece's 130 billion euro rescue package by European leaders after months of political brinksmanship and stalled negotiations.
The benchmark Nikkei slipped 0.2% to 9,463.02 in a choppy session after a 6% rally in the past seven sessions.
Market participants said the European agreement was already priced in and the benchmark faces stiff resistance at the 9,500 level, where selling pressure accelerates.
"In terms of resolution, the Greek bailout has not solved anything ... The market is stable because of excess liquidity provided by global central banks. If you look at the reality in Europe, it's very difficult to find any reason to keep buying," said Kenichi Hirano, chief operating officer of Tachibana Securities.
The Nikkei tested resistance during the session and hit an intraday high of 9,517.04, but retreated below the key level.
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"There is movement in the market, but it's not as if there's a lot of new funds flowing in yet. Domestic institutional investors are just happy to take profits ahead of March (earnings reporting season)," said Hirano.
The day's big winners were social gaming companies DeNA and Gree, with DeNA spiking 8.2% and Gree up 7%.
DeNA rose after it announced plans to expand into the South Korean market with a leading Korean portal site provider, Daum Communications Corp.
Gree recovered from the previous session's 6.2% decline and topped the turnover list after it said the suspension of its "Tanken Doriland" game due to a glitch would have a limited impact on earnings.
Olympus Corp also outperformed, up 3.9% after the Nikkei business daily said the camera and endoscope maker, struggling to emerge from an accounting scandal, plans to promote veteran executive Hiroyuki Sasa to president in April.
The broader Topix slipped 0.3% to 816.29.
Trading volume slipped for a second day, with 2.38 billion shares changing hands on the main board, down from 2.42 billion shares on Monday.
Profit-taking
The Nikkei is up 7.5% this month, taking this year's gains so far to more than 11%, supported by a run of strong economic data out of the United States, as well as the European Central Bank's liquidity injection of nearly half a trillion euros and further easing steps by the Bank of Japan.
If it finishes the month with the current gains it would be its best February performance since 1991.
But market players said with selling pressure increasing at the 9,500 level, investors shed core 30 stocks that had rallied recently.
Among stocks that succumbed to profit-taking were Nissan Motor Co, down 1.5%, and Sumitomo Mitsui Financial Group, losing 1.2%.
Toyota Motor Corp, which soared 7.4% last week, slipped 0.9% on Tuesday.
"It's only natural that people are taking profits," said Takashi Hiroki, chief strategist at Monex Inc.
He expected investors to switch to small cap stocks from large cap stocks, however, as big caps have outperformed their smaller peers.
Mazda Motor was a loss leader on the main board, shedding 9.9% after sources said the automaker was aiming to raise 100 billion yen through a public share offering and 70 billion yen through subordinated loans from banks.
Market players said investors sold off the stock after the report and traders said the size of the fundraising was much bigger than expected.