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Tokyo - Tokyo stocks slipped 0.36 percent on Tuesday following losses on Wall Street and on lingering concerns about tensions between the West and Russia over Ukraine.
The benchmark Nikkei 225 index fell 52.11 points to finish at 14,423.19, while the Topix index of all first-section shares edged up 0.06 percent, or 0.66 points, to 1,163.70.
Investors tracked the retreat on Wall Street where the Dow finished 0.16 percent lower and the tech-rich Nasdaq fell 1.2 percent.
US President Barack Obama and other members of the Group of Seven economic powers on Monday cancelled an upcoming summit in Russia, seeking to deepen Moscow's isolation after it absorbed Crimea from Ukraine this month.
After emergency talks called by Obama, it was announced that the June gathering in Sochi would be replaced by a G7 meeting in Brussels, without Russian involvement.
The simmering tensions have spooked investors, but dealers say there has been an encouraging pick up in Japanese shares' trading volume.
“Although risk aversion has declined from recently elevated levels there is still a high degree of caution from investors who are unwilling to take long-term bets,” Credit Agricole said in a note.
“The causes of market angst have remained unchanged over recent weeks, namely Ukraine tensions, weaker growth in China and US data that has performed below expectations.”
Chinese manufacturing activity contracted in March to its lowest level in eight months, data showed Monday, prompting calls for policymakers to tackle a painful slowdown in the world's number two economy.
China is a major trading partner with Japan and any weakness in the powerhouse economy affects Japanese firms.
Tokyo investors are also closely watching the impact of Japan's April 1 sales tax hike, its first since the late 1990s, amid fears it will hit consumer spending and dent the country's nascent recovery.
“It takes time to see the impact of the sales-tax hike clearly,” Shigeo Sugawara, senior investment manager at Sompo Japan Nipponkoa Asset Management, told Dow Jones Newswires.
In forex markets, the dollar bought 102.25 yen, compared with 102.26 yen in New York Monday.
In stock trading, Sharp fell 2.02 percent to 291 yen and Nikon lost 0.60 percent to 1,635 yen, while Sony rose 2.16 percent to close at 1,837 yen.
Japan's number-two automaker Nissan rose 0.90 percent to 890 yen, while Toyota added 0.77 percent to 5,560 yen. - Sapa-AFP