Japanese shares edged lower on Thursday as investors pulled back after recent gains and digested a mixed bag of corporate earnings ahead of a high profile Group of Seven nations meeting.

Mazda Motor Corp sank 3.35% after the carmaker cut sales and operating forecasts for the just-ended fiscal year due to production constraints. Sumitomo Metal Mining Co plunged 10.83% after forecasting earnings far below analyst estimates, amid uncertainty over China's economy and metals prices.

Imaging company Fujifilm Holdings Corp surged 5.34% following results that beat market expectations. ENEOS Holdings Inc jumped 3.25%, leading energy shares higher as oil prices rose in Asia trading.

The benchmark Nikkei lost 0.21% to 29,062.04 as of the midday break, retreating for a second-straight session from a 16-month peak. The broader Topix skidded 0.21% to 2,079.60.

Nearly 300 companies reported earnings on Wednesday, followed by about 1,500 more on Thursday and Friday. Meanwhile, Group of Seven nations' leaders and finance officials are meeting in Japan in the coming days, clouded by the potential absence of U.S. President Joe Biden due to stalled negotiations on lifting the U.S. debt limit to avert a default.

"With the Nikkei average rising to highest levels this year, from the this point, we have to start wondering if these (valuation) levels are reasonable," said Nomura strategist Kazuo Kamitani. "With that in mind, I think it's becoming difficult to chase further price increases."

"Looking forward, we need to keep an eye on the news flow about the U.S. debt ceiling issue while following earnings announcements," he added.

On the Nikkei, 154 companies lost ground, versus 64 that advanced. Nonferrous metals producers were the biggest decliners among the Tokyo Stock Exchange's 33 industry sub-indexes, sliding 4%. Oil and gas companies were the biggest gainers, climbing 2.1% as a group. (Reporting by Rocky Swift; Editing by Nivedita Bhattacharjee)