On October 8, the Nikkei 225 index closed down 1.4% at 69,042.11 points.

During the session, the benchmark touched a high of 69,918.20 points and a low of 69,194.12 points, with the index trending downward in a volatile manner during the afternoon as machinery and financial sectors weakened.

After Japanese stocks recently broke through the 70,000-point mark, the market accumulated a substantial amount of profit-taking positions. In the absence of further positive catalysts, some machinery stocks that had posted large gains earlier and financial stocks rattled by interest rate volatility saw notable pullbacks, becoming the main factors weighing on the market today.

The Bank of Japan raised its assessment of regional economies for the first time since early last year, signaling growing confidence in the economic recovery and providing justification for another rate hike.

Among the nine regions covered in the quarterly economic report released today, the Bank of Japan upgraded its economic assessments for the Tohoku and Shikoku regions. This marked the first upward revision since January last year.

The Bank of Japan said on Thursday: "All nine regions said their local economies were recovering moderately, were picking up, or were picking up moderately, although some areas showed signs of weakness."

Following last month's rate hike, the market broadly expects the Bank of Japan to raise rates again in December. The report did not signal an urgent need for an immediate rate increase, but the upgraded assessments indicate that economic trends are consistent with the Bank of Japan's view that further rate hikes are necessary.