The Nikkei was down as much as 1.3% to 13,073, after the Fed signaled on Wednesday that it could begin to taper its bond buying program this year.
The FOMC upwardly revised its economic forecasts and in prepared remarks Fed chairman Ben Bernanke said the bond buying could be completely finished by 2014 if economic conditions continue to be supportive.
The Nikkei has since pared some of its losses and is down 0.7%.
A look at the five-day shows the early sell-off in the Nikkei after the Fed announcement:
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