Japanese stocks declined in early trading, reversing the sharp gains driven by AI-related equities from the previous session.

The electronics sector led the downturn, with Tokyo Electron falling 4.7% and Murata Manufacturing dropping 4.2%.

The U.S. dollar was trading at 157.68 yen, compared to 157.70 yen at the close of Tokyo trading on Wednesday.

Investors are closely monitoring corporate earnings, with NTT Inc. set to release its quarterly results later on Thursday.

Developments in the Middle East are also drawing significant attention.

The Nikkei index fell 1.3% to 65,464.44 points.