Japan's Nikkei share average edged down in choppy trade on Tuesday morning after rising to a two-month high on the previous day as investors stayed on the sidelines before key events this week.
Despite the directionless trade in the overall market, some stocks shone on individual news.
Seven & I Holdings surged more than 4 per cent after sources told Reuters that Third Point has bought a stake in the retailer.
Ashikaga Holdings Inc soared 7 per cent on news that it and Joyo Bank Ltd were in merger talks. Joyo Bank rose 0.9 percent.
By midmorning, the Nikkei shed 0.2 per cent to 18,915.24, hovering near 18,923, which is a 50 per cent retracement of its August high to its September low.
Market analysts said that investors are staying on the sidelines before big events this week, which include policy meetings by the U.S. Federal Reserve and the Bank Of Japan.
The BOJ is expected to cut its rosy inflation forecasts in a semi-annual report due out on Friday, but many BOJ officials prefer to hold off on expanding its already massive stimulus programme, which has had limited success in accelerating inflation since being launched two-and-half years ago.
"Investors think the BOJ should announce additional easing due to recently soft economic data such as industrial output," said Norihiro Fujito, senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities. "But the market has recovered from its lows and the current Nikkei's level may not justify easing."
He added that if the central bank stands pat on Friday, the market may fall as there are some market participants who still expect extra easing.
Exporters were mixed, with both Toyota Motor Corp and Honda Motor Co falling 0.2 per cent, Panasonic Corp dropping 0.7 per cent and Canon Inc shedding 1.9 per cent.
Advantest Corp dropped 5.9 per cent after it cut its earnings forecast.
The broader Topix dropped 0.3 per cent to 15,54.75 and the JPX-Nikkei Index 400 also declined 0.3 per cent to 13,943.49.