Japanese stocks dropped for a third day, with investors remaining on the sidelines as central bankers gather in Jackson Hole, Wyoming for an eagerly awaited annual symposium.

Topix Index fell 0.5% to 3,082.95 as of 3:31 p.m. Tokyo time

Out of 1,679 stocks in the index, 694 rose and 911 fell, while 74 were unchanged

Nikkei declined 0.6% to 42,610.17

Auto and pharmaceutical shares slumped, while profit-taking pressured sectors such as construction. Meanwhile, some AI-related stocks including Advantest were picked up by investors after Wednesday's selloff to gain 1.7%. 

Pharmaceutical company Daiichi Sankyo contributed the most to the Topix's decline decreasing 7.2%, after a series of block trades were executed before the market open at a discount to the previous close.

With the Jackson Hole symposium approaching, the question will be whether Fed rate-cut expectations will be reinforced, which would be positive for global equities but a headwind for Japanese stocks if the yen strengthens, said Tetsuo Seshimo, a portfolio manager at Saison Asset Management. 

"Given that Japanese stocks had already run up quite a bit, it feels like they're now facing some tougher conditions," he said. 

Source: Bloomberg