TOKYO: Japanese shares fell sharply on Tuesday as renewed geopolitical tensions damped risk sentiment and a sudden surge in the yen weighed on exporters.
The benchmark Nikkei 225 index slid 1.7 percent to close at 65,269.33. The broader Topix slipped 1.83 percent to 4,050.33.
Iran escalated threats against the United States and said it had fired an advanced missile at US warships, keeping oil prices near multi-week highs.
With inflation pressures mounting, markets are pricing a near-certain Bank of Japan rate hike to 1.25 percent next week. The prospect of tighter monetary policy has boosted the yen, which strengthened to 152.89 per dollar, its highest level since February.
“It appears as though the run-up in oil prices is impacting Japanese shares,” said Maki Sawada, an equities strategist at Nomura Securities. “This appreciation of the yen is also weighing on the market.”