TOKYO: Tokyo's benchmark Nikkei index closed down two percent Wednesday, weighed down by virus fears with another state of emergency expected to be imposed in the Japanese capital and other major cities.

The Nikkei 225 index dropped 2.03 percent, or 591.83 points, to end at 28,508.55, while the broader Topix index fell 1.98 percent, or 38.07 points, to 1,888.18.

"The Nikkei index is weighed down by concerns over the rise of cases worldwide and uncertainty over the Tokyo Olympics," said Rikiya Takebe, senior strategist at Okasan Online Securities.

Covid-19 cases have been rising in Japan since the previous state of emergency was lifted last month, with the latest surge driven by more contagious variants.

The government is expected to impose new emergency measures in areas including Tokyo and Osaka to coincide with a week-long holiday period starting next week.

But the measures are still likely to be less strict than the blanket lockdowns seen in other countries.

In Tokyo trading, Toshiba tumbled 3.3 percent to 4,205 yen after the firm said British private equity fund CVC would await guidance on its buyout proposal of the Japanese conglomerate.

Suzuki Motor dropped 4.18 percent to 4,375 yen after a report said it would cut output by a further 10,000 units in Japan due to a chip shortage.

Major automakers were also lower with Toyota falling 2.44 percent to 8,212 yen, Honda sinking 2.59 percent to 3,189 yen and Nissan losing 1.84 percent to 546.9 yen.

IT and investment giant SoftBank Group gained 1.02 percent to 9,922 yen after a report said net profit for the year to March is likely to be above four trillion yen ($37 billion) thanks to rises in global share prices.

The dollar fetched 107.99 yen in Asian trade, against 108.08 yen in New York late Tuesday.