TOKYO: Japanese shares inched lower on Tuesday as investors looked past upbeat corporate outlook amid worries about the government's handling of the COVID-19 pandemic, while chip-related stocks took cues from a positive finish overnight on the Nasdaq.

The Nikkei share average inched down 0.15% to 29,083.82 by 0211 GMT, while the broader Topix slipped 0.37% to 1,910.83.

"There are uncertainties on the effect of the state of emergency that is imposed on certain parts of Japan, as many people seem to be ignoring it," said Takatoshi Itoshima, strategist at Pictet Asset Management.

"Shares in companies, which reported positive earnings, are not rising. That means investors' expectations for corporate outlook are too high."

Japan imposed a third state of emergency on Tokyo and other big cities, but local media have reported many parts of Tokyo are still crowded as people aren't complying with the order.

Chip-related shares gained, aided by a strong finish for the Nasdaq overnight. Tokyo Electron inched up 0.29%, TDK gained 1.45% and Kyocera rose 0.95%.

Camera and medical equipment maker Canon edged down 0.19% even after its annual operating profit forecast beat market consensus.

Nitto Denko slipped 1.49% after the industrial materials maker's annual net profit forecast missed analysts' consensus.

The stocks that gained the most among the top 30 core Topix names were Nidec up 1.31 %, followed by Sumitomo Mitsui Financial Group rising 1.17%.

The underperformers among the Topix 30 were Keyence down 2.92%, followed by Hoya that lost 1.99%.