The Nikkei dropped on Tuesday (March 26th) as investors continued to be cautious about the Cyprus bailout.
Talks in the European country have yielded an agreement, but the markets have not responded well to the news.
On Tuesday, the Nikkei slipped by 0.5 per cent to close the day at 12,488.39, with a senior dealer at a foreign bank in Tokyo telling Reuters there have been some "pretty good flows" on the index.
"We do have a bit of profit taking in some blue chips. I guess we are 50-50 (in buy and sell orders)," he said.
Dutch finance minister Jeroen Dijsselbloem has suggested the bailout in Cyprus could represent a new way of handling financial crises in the eurozone.
The Nikkei was down by almost two per cent over the course of last week as investors took their profits out of the market due to fears over the Cyprus bailout.
Major corporations saw their stocks lose value, with Mazda Motor Corp down 2.7 per cent.
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