TOKYO: Japanese shares fell on Thursday, as the country's plan to reintroduce a state of emergency to contain a resurgence of Covid-19 infections stoked worries about an economic slowdown. The Nikkei share average slipped 0.88% to 28,118.03, its lowest close in more than two weeks, while the broader Topix was down 0.90% at 1,920.32.

Japan is set to declare its fourth state of emergency for Tokyo that will run through its hosting of the Olympics, a key minister said. The Tokyo area is currently under slightly less strict "quasi emergency" curbs. Under the heightened restrictions, restaurants will be asked to stop serving alcohol, economy minister Yasutoshi Nishimura said.

"The reintroduction of state of emergency is one reason that investors are hesitant to buy Japanese stocks," said Shigetoshi Kamada, general manager for the research department of Tachibana Securities. Olympic organisers are set to ban all spectators from the Games, which are scheduled to run from July 23 to Aug. 8, the Asahi daily said on Thursday.

Retailers Isetan Mitsukoshi Holdings and Marui Group fell 3.1% and 2%, respectively. Showa Denko slipped 1.9% after a report said the materials maker planned to sell its underperforming lead-acid battery operations to Japanese private equity fund Advantage Partners.

Super market operator Aeon briefly jumped following upbeat earnings before erasing gains to end 0.8% lower. Daikin Industries jumped 3.7% after the Nikkei business daily reported the air conditioner maker had developed a refrigerant for electric vehicles that could extend their range by up to 50%.