Tokyo stocks snap 5-day win streak amid concerns over tariff talks
The 225-issue Nikkei Stock Average ended down 501.06 points, or 1.24 percent, from Monday at 39,986.33. The broader Topix index finished 20.77 points, or 0.73 percent, lower at 2,832.07.
On the top-tier Prime Market, decliners were led by service, pharmaceutical and precision instrument issues.
The U.S. dollar briefly weakened to the mid-143 yen range in Tokyo amid growing speculation that the U.S. Federal Reserve may cut interest rates earlier than previously expected.
The yen's appreciation also came after stronger-than-expected sentiment among major manufacturers shown in the Bank of Japan's Tankan survey fueled expectations for an early interest rate hike by the central bank, dealers said.
Stocks retreated after the benchmark Nikkei advanced more than 2,000 points over the past five trading days, while export-linked auto and electronics were sold on a firmer yen, which decreases exporters' overseas profits when repatriated.
The market was also pressured after U.S. President Donald Trump complained Monday that Japan is not importing enough American rice, further clouding the outlook for bilateral tariff negotiations with the two countries struggling to make progress, brokers said.
"Investors were likely finding it difficult to buy further without incentives reflecting (positive) economic fundamentals after the Nikkei surpassed the 40,000 line," said Masahiro Yamaguchi, head of investment research at SMBC Trust Bank.
"While U.S. tariff talks with other countries appear to be heading in a positive direction, Japan is not seen to be moving in that way, fueling concerns about the prospects" of the bilateral negotiations, he said.
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