Japan's Nikkei index fell from its highest level in 34 years on Wednesday, affected by a sharp decline in Wall Street indices at the end of trading on Tuesday, but the weakness of the yen and increased investor interest are expected to push the benchmark index towards new high levels soon.

The Nikkei index rose to 38,010.69 points in the previous session, remaining not far from the highest record level during a trading day at 38,957.44 points recorded in December 1989, and closing at the highest level since January 1990. The Nikkei has risen 12.7 percent so far this year.

On Wednesday, the Nikkei fell 0.6 percent to close at 37,703.32 points. The broader Topix index also fell 1.05 percent to 2,584.59 points.

Major indexes on Wall Street fell overnight after a higher-than-expected reading of consumer price inflation dampened market expectations of imminent interest rate cuts, pushing US Treasury yields higher.

A weaker yen would favor the Nikkei index. The yen fell at the end of trading on Tuesday to 150 yen to the dollar for the first time since November 17.

The shares of SoftBank Technology Investment Group fell 3.36 percent, becoming the biggest obstacle to the Nikkei index, after the shares of the British chip design company Arm Holdings fell 14 percent.

The shares of Recruit Holdings, the recruitment agency, lost 3.98 percent, and the shares of Daikin Industries, which manufactures air conditioning equipment, lost 2.33 percent.

Tokyo Electron, a manufacturer of chip-making equipment, lost gains it made at the beginning of the session to close down 0.56 percent.

As for the shares of Advantest, which manufactures chip testing tools, it rose 2.68 percent, and the shares of Fast Retailing, which owns the Uniqlo brand, rose 1.22 percent.