Tokyo - Tokyo stocks slipped on Tuesday morning as exporters were hit by a yen rally, fuelled by concerns over President Donald Trump's plans for global trade deals and comments from his Treasury Secretary pick over the dollar.
Trump followed up an inauguration speech seen as angry and protectionist by making his first official act the withdrawal from the 12-nation Trans-Pacific Partnership (TPP).
The new president also said he would renegotiate the North American Free Trade Agreement and threaten to impose border taxes, while his chief spokesman said he would not hesitate to confront Beijing over access to the South China Sea.
"If protectionism increases, companies that have been operating on the assumption of free trade until now will have to rethink their policies," said Toshihiko Matsuno, a senior strategist at SMBC Friend Securities.
"The market is afraid that if President Trump further intensifies his protectionist colours with border taxes, the global economy will start shrinking," he told Bloomberg News.
The benchmark Nikkei 225 index edged down 13.32 points, to end the morning at 18 877.71, while the Topix index of all first-section issues fell 4.28 points, to 1 510.35.
Investors cheered Trump's November election hoping he would pursue pro-growth measures such as public works spending, lower taxes and regulatory reforms.
Trump confirmed on Monday he plans to pursue those priorities, but markets are growing concerned about his lack of detail and the possibility his tough talk will lead to a trade war.
Japan's Prime Minister Shinzo Abe, who made the TPP a key part of his economic growth drive, said Tokyo would keep pressing the US on the merits of the agreement.
The dollar weakened to ¥112.79 from ¥113.35 in Tokyo on Monday afternoon.
A strong yen - seen as a safe investment - is a negative for Japanese exporters because it makes their products less competitive abroad and shrinks repatriated profits.
Automakers fell, with Toyota dropping 1.18% to ¥6 611 and Honda down 1.57% at ¥3 378.
Toshiba fell 3.34% to ¥259.9 while market heavyweight Fast Retailing, the operator of Uniqlo clothing chain, was down 2.17% at ¥35 550.
Takata sank 5.35% to ¥442, after six days of losses that saw its market value more than halved over fears of a lengthy bankruptcy restructuring for the airbag maker at the centre of the biggest-ever auto safety recall.
Mitsubishi Heavy Industries fell 1.46% to ¥516.4, extending the previous day's losses after it postponed delivery of its long-awaited regional jet by two years and warned over soaring development costs for the problem-plagued plane.
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