TOKYO, May 10 (Xinhua) -- Japan's benchmark Nikkei stock index closed lower on Wednesday, as investors secured profits ahead of the release of U.S. inflation data later in the day that will inform the future course of the U.S. Federal Reserve's interest rate hikes.

The 225-issue Nikkei Stock Average dropped 120.64 points, or 0.41 percent, from Tuesday to close the day at 29,122.18.

The broader Topix index, meanwhile, lost 11.64 points, or 0.55 percent, to finish at 2,085.91.

Local brokers said issues attracted buying following the release of some solid domestic earnings reports, but the market mood remained cautious following remarks from Federal Reserve Bank of New York President John Williams that could be interpreted as suggesting inflation in the United States will persist.

Hence, they added, it may be reasonable to assume the Fed will continue with its aggressive monetary policy in a bid to tame inflation, despite continued concerns the U.S. economy could be heading into a recession.

"Investors are focusing on whether the U.S. CPI numbers will come out higher than market expectations as a rise that beats the market consensus would increase the likelihood of a rate hike in June by the Fed," Yutaka Miura, senior technical analyst at Mizuho Securities Co., was quoted as saying.

As for profit taking, analysts here said that the market's rise the previous day was an obvious cue for investors to lock in gains ahead of the release of U.S. inflation data later in the day, along with Wall Street's downbeat performance overnight.

"Today, we're seeing the retracement of some of Tuesday's strong rise, which has created an environment that's ripe for profit taking. Domestic earnings are certainly a key focus for the market this week, but so are U.S. inflation readings," Maki Sawada, a strategist at Nomura Securities, was quoted as saying.

Toyota Motor gained 0.8 percent, after announcing a share buyback plan, although the automaker's net profit forecast for the business year to March fell short of median market expectations.

Mitsubishi Motors skidded down, however, tumbling 9.8 percent, after reporting the previous day a disappointing net profit outlook for the year to next March.

Other notable losers included Konica Minolta slumping 4.7 percent, after lowing its net profit forecast, while Daikin Industries dropped 1.2 percent, after saying it expects its net profit to drop looking ahead.

By the close of play, mining, pharmaceutical and food shares comprised those that declined the most.

The turnover on the Prime Market on the third trading day of the week came to 3,187.79 billion yen (23.57 billion U.S. dollars). Enditem

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