TOKYO, Jan 18 (Reuters) - Japanese stocks fell to five-week lows on Wednesday, hurt by the yen's rapid appreciation and as investors were cautious ahead of U.S. President-elect Donald Trump's inauguration on Friday.
The Nikkei share average was down 0.35 percent at 18,747.66 after touching 18,650.33, its lowest level since Dec. 9.
The index has declined steadily from a one-year high of 19,615.40 struck two weeks ago, a peak reached when the yen was significantly weaker amid expectations that Trump would introduce stimulatory and reflationary policies.
The Trump hopes, however, has recently been tempered ahead of Friday's inauguration.
"The yen's rise on the back of reports that Trump had expressed concern towards a strong dollar is weighing on equities," said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui Asset Management.
"The market was driven mostly by expectations in the last two months and now awaits policy specifics as Trump's inauguration looms. Volatility is likely to remain high until then."
Banking shares underperformed, weighed down by an overnight drop in their Wall Street peers.
Tokyo's bank sub-index shed 1.7 percent, hitting its lowest level since Dec. 1. Mitsubishi UFJ Financial Group fell 2.2 percent, Sumitomo Mitsui Financial Group dropped 1.4 percent and Mizuho Financial Group shed 1.6 percent.
The S&P 500 financial index, which has rallied since the November U.S. election on expectations of higher interest rates and reduced regulation under Trump, had its worst day since June 27 on Tuesday, falling 2.3 percent.
Toshiba Corp was up 2.2 percent after a report that it was looking to spin off its semiconductor business assets and sell a roughly 20 percent stake in the unit to Western Digital Corp for up to $2.7 billion.
Seafood companies gained after the Nikkei business daily said that real estate developer Mitsubishi Estate Co would start delivering fresh seafood to residents. Nippon Suisan Kaisha added 4.2 percent, Maruha Nichiro rose 1.4 percent and Nichirei Corp edged up 0.8 percent.
Communication services provider U-NEXT Corp advanced 1.3 percent after announcing the start of a joint venture with home appliance retailer Yamada-Denki Co that engages in the operation and provision of MVNO (Mobile Virtual Network Operator) services. Yamada-Denki was up 0.7 percent.
The broader Topix lost 0.5 percent to 1,501.80 and the JPX-Nikkei Index 400 declined 0.45 percent to 13,456.33
The dollar, also hurt by sterling's rally following British Prime Minister Theresa May's Brexit speech, touched a near seven-week low of 112.570 yen. (Editing by Shri Navaratnam)