Japan's Nikkei fell on Monday, as the yen recouped some earlier losses, prompting investors to take profits from last week's gain while investors shunned risk before the winner of a tightly fought US election is known.
But Toyota Motor Corp rose 2.2% to a one-month high at 3,210 yen after public broadcaster NHK said it was set to slightly raise its operating profit forecast.
After the market close, the automaker raised its full-year net profit forecast to $9.7 billion even after its sales in China, the world's biggest autos market, were battered by protests against Japan over a territorial dispute.
The Nikkei was down 0.5% to 9,007.44, while the broader Topix was 0.6% lower at 747.95.
Analysts said that although the weak-yen trend lends support to the market to some extent, investors still do not want to buy blue-chip electronics stocks as many of them cut their full-year outlooks.
"Investors are not still past the shocks from bad earnings. But once such pessimism is priced in, investors will likely gradually chase the market higher towards the end of the year," said Hiromichi Tamura, chief strategist at Nomura Securities.
"Investors may stay cautious on export-sensitive electronics stocks, but the overall market will likely be supported by buying in material stocks like steelmakers."
Panasonic Corp, which tumbled last week as the electronics maker startled the market with a massive loss outlook, extended losses, ending down 5.6% at 388 yen.
Sharp Corp dropped 6.7% to 154 yen, hitting a two-week low after Fitch Ratings downgraded the struggling TV maker's credit rating by six notches to B-minus after the market close on Friday.
Sharp warned on Thursday of a $5.6 billion net loss for the business year and said it might not be able to survive on its own.
Analysts said that a softer yen would continue to alleviate pessimism on poor earnings and that the Nikkei should trade between 8,950 and 9,100 in the next few days.
"The presidential election will likely set the tone for the currency market. If the dollar rises to 81 yen, investors may chase the market to around a September closing high of 9,200 over the next month or so," said Toshihiko Matsuno, senior strategist at SMBC Friend Securities.
The yen was quoted at 80.365 to the dollar on Monday afternoon, slightly higher than the pair which stayed above 80.500 earlier.
Helped by the upbeat mood in Toyota, Honda Motor Corp <7267.T> added 1.2% to 2,497 yen and Nissan Motor Corp <7201.T> gained 0.7% to 691 yen.
Amid sluggish global growth, company earnings have been weak this quarterly reporting season. About 56% of the 101 Nikkei companies that have reported earnings undershot market expectations, according to Thomson Reuters StarMine. That compared with 54% in the previous quarter.
Yamada Denki Co fell 7.5% to 3,170 yen after the home electronics retailer slashed its operating profit forecast for the year ending March 2013 by 39% to 57.3 billion yen, citing weaker sales.
Shares of eAccess Ltd surged 13% to 51,600 yen, a 19-month high, after mobile operator Softbank Corp <9984.T> said on Friday it would change its share swap ratio with eAccess, which it acquired in a $1.84 billion deal at the start of last month.
The benchmark Nikkei is up 6.5% this year, trailing a 12.5% rise in the US S&P 500 and a 12.4% gain in the pan-European STOXX Europe 600 index.
Volume was low, with 1.46 billion shares changing hands, compared to Friday's 1.88 billion shares.