The Nikkei continued to underperform the broader market, after the Bank of Japan said on Friday it would no longer purchase Nikkei-linked exchange traded funds (ETFs).
The Nikkei share average fell 2.07 per cent to close at 29,174.15, its biggest decline since March 4.
The broader Topix ended its eight-day winning streak, falling 1.09 per cent to close at 1,990.18.
Renesas dropped as much as 4.89 per cent after the key automotive semiconductor supplier said production at its fire-damaged plant will take at least a month to restart, and carmakers will start to feel a supply pinch in about a month.
The transport equipment index was the biggest drag in the market, followed by the insurance sector.
Honda Motor dropped 3.63 per cent while Nissan Motor lost 3.7 per cent. Car parts maker Denso shed 4.94 per cent and Toyota Motor fell 3.26 per cent.
The shares that have big weightings in the Nikkei average continued to reel from the Bank of Japan’s decision to buy only Topix-linked ETFs.
Fast Retailing dropped 4.54 per cent while Daikin fell 4.02 per cent.
“Today we have had a confluence of negative factors such as a fire at Renesas factory and the market confusion after the BOJ’s move. But fundamentally, the market is likely going through a correction on worries about rising U.S. bond yields,” said Shinichi Ichikawa, senior fellow at Pictet Asset Management.
Tokio Marine fell 5.55 per cent on worries about its exposure to collapsed British supply chain finance firm, through its subsidiary in Australia.
