TOKYO: Tokyo stocks closed down 0.85 percent on Tuesday as a drop in financial shares reversed early gains driven by a weaker yen.
The Nikkei 225 index lost 123.61 points to finish at 14,388.77, while the Topix index of all first-section shares was off 0.76 percent, or 8.90 points, to 1,162.50.
In early Tokyo trade, Japanese exporters won support from a weaker yen -- which boosts their profitability -- after the unit fell on poor trade data which boosted speculation of more Bank of Japan monetary easing.
Government figures on Monday showed that Japan's trade deficit quadrupled on-year in March to 1.45 trillion yen ($14 billion), bringing the total shortfall for the fiscal year to March to a record 13.75 trillion yen.
But the weaker yen had limited impact on a lacklustre market, analysts said.
"Foreign investors, who are such a key component to overall participation, are simply not participating, and with individual domestic investors also not moving much, the question to ask is: 'what will draw them back?'" said Kenichi Hirano, market analyst at Tachibana Securities.
The Japanese government has announced an overhaul of its investment committee that directs the nation's $1.2-trillion Government Pension Investment Fund (GPIF), signalling the conservative fund may move away from its bond-heavy portfolio by buying more equities.
But "investors want to see some real numbers; for example, if the GPIF plans to raise its domestic equity allocation to, say 19 percent or 20 percent" from the current 17 percent, he said.
Among the losers in share trading was Mitsui O.S.K. Lines after the Shanghai maritime court seized a large freight vessel owned by the company in a dispute over what the Chinese side says are unpaid bills relating to the 1930s.
The stock fell 0.84 percent to 352 yen after a 1.11 percent fall the previous day.
Financial shares also fell, with Japan's biggest bank Mitsubishi UFJ finishing down 2.31 percent to 548 yen and Sumitomo Mitsui closing 1.41 percent lower to 4,035 yen.
Sony lost 1.70 percent to 1,899 yen, while Panasonic fell 0.97 percent to close at 1,112 yen.
In forex trading, the dollar bought 102.47 yen, down from 102.62 yen in New York Monday. (AFP)