The balance of trade in goods registered a deficit of 585.1 billion yen (7.6 billion U.S. dollars) in November and follows 206. 1 billion yen deficit logged a month earlier, the ministry said just before markets opened in Tokyo. The figure compares to a surplus of 373.2 billion yen booked in September, the ministry's data also showed.

The ministry indicated that exports declined in the recording period on slumping global demand and rising prices for commodities and resources.

The recent strength of the yen and turbulence in the eurozone has also negatively impacted Japanese exporters who rely on a weak yen to boost profits made overseas and overall competitiveness in global markets, strategists added. When the yen is weak exporters see profits diminished when they are repatriated.

China-linked issues rose as the nation's inflation rate dipped and Hitachi Construction Machinery gained 0.7 percent to 1,321 yen, while Komatsu climbed 2.7 percent to close at 1,902 yen.

But Japanese exporters came under pressure following news of the nation's trade deficit and camera maker Canon declined 0.9 percent to 3,255 yen, while Mazda Motor Corp. skidded down 2.3 percent to 128 yen.

Securities stocks fell following gains made yesterday following their U.S. peers' advance and Nomura dropped 3.5 percent to 250 yen. Japan's largest brokerage said that the firm had seen a significant drop in turnover by investors here.

Tokai Tokyo Financial Holdings Inc., meanwhile, lost 3.7 percent to 207 yen, while counterpart Okasan Securities Group Inc. relinquished 3.2 percent to close at 241 yen.

Embattled endoscope maker Olympus Corp., struggling to regain its image after a massive investment scandal came to light, gained 3.3 percent to 1,270 yen, following reports the firm is considering tie-ups with consumer electronics firms like Sony Corp. and Panasonic Corp.

Trading volume on Thursday dropped to 1.38 billion shares on the Tokyo Exchange's First Section, down from Wednesday's volume of 1.65 billion shares, with declining issues outnumbering advancing ones by 1,209 to 340.