TOKYO, Dec 2 (Reuters) - Japanese shares fell in early trade on Thursday hit by worries about the Omicron coronavirus variant and a hawkish tilt at the U.S. Federal Reserve, but pared most of these losses on bargain-hunting in quality stocks.
At 0045 GMT, the Nikkei average were down 0.54% at 27,780.02, after falling as much as 1.04% earlier.
The broader Topix shed 0.40% to 1,929.43 but hovered above Wednesday's three-month intraday low of 1,914.93.
Investors fretted over economic damages from the Omicron coronavirus variant, with the United States becoming the latest country to report a case.
"The market is reacting a bit emotionally to... Omicron. Yesterday, U.S. stocks fell when the market heard about just one person getting it in the U.S., as if that is more important than 534,000 people getting jobs according to ADP report," said Norihiro Fujito, chief investment strategist at Mitsubishi UFJ Morgan Stanley Securities.
"But at current market levels, long-only investors are ready to buy stocks that have good prospects," he said.
Another headwind was after Fed Chair Jerome Powell said on Tuesday that policymakers will discuss an earlier end to the central bank's stimulus.
Airline shares got a fresh blow after they suspended new reservations for international flights to Japan until the end of December at the government's request.
Japan Airlines fell 2.7%, while ANA Holdings lost 1.5%.
Train operators sagged, with East Japan Railway losing 2.6% and Keisei Electric Railway falling 2.0% to a one-year low.
Mitsubishi Chemical sank 8.9% after investors gave a cold shoulder to its plan to spin off its petrochemical and carbon operations.
On the other hand, defensive shares such as drugmakers and some growth-oriented stocks attracted bargain-hunting.
Ono Pharmaceutical rose 2.4%, while Astellas Pharma gained 1.7%.
Industrial automation system maker SMC rose 1.1%, while bicycle maker Shimano jumped 2.6%.
(Reporting by Hideyuki Sano; Editing by Rashmi Aich)
