The Nikkei 225 fell 1.3% to close at 34,280, while the broader Topix Index dropped 1.18% to 2,529 on Monday, snapping a two-day rally as a stronger yen weighed heavily on Japan’s export-oriented sectors.
Investor sentiment was further dampened by uncertainty surrounding US-Japan trade talks.
Japan is reportedly considering increased imports of soybeans and rice as concessions in ongoing negotiations.
Last week, US officials voiced concerns over trade barriers in Japan’s automotive and rice sectors, while also urging Tokyo to expand purchases of American meat, fish, and potatoes.
Export-reliant automakers led the market lower, with notable losses from Suzuki Motor (-3.9%) and Toyota Motor (-2.9%).
Financial and retail stocks also retreated, including Mitsubishi UFJ (-1.9%) and Fast Retailing (-1.7%).