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Tokyo - Tokyo shares fell Tuesday as energy firms suffered heavy losses after oil resumed its downward spiral, and a rally fuelled by the Bank of Japan's (BoJ) latest policy moves faded.
The slump in crude prices sapped market sentiment as investors gauge the impact of the central bank's surprise stimulus announcement last week.
The move to introduce a negative interest rate policy came as concerns grow over China's slowing economic growth, which was reinforced by weak manufacturing data on Monday.
The BoJ's move - intended to ramp up lending to people and businesses in order to kick start the economy and fend off deflation - led to a surge across global financial markets and sent the yen tumbling, which is good for Japanese exporters' profitability.
"The primary beneficiary from the BoJ's negative rates is obviously the yen," said Akio Yoshino, chief economist at Amundi Japan, told Bloomberg News.
"However, it's not like there's been a real change on a structural level to maintain a weaker yen."
The yen picked up pace on Tuesday. The dollar bought ¥120.65 on Tuesday, down from ¥120.96 in New York.
Oil and China worries dominated the market as the benchmark Nikkei 225 index at the Tokyo Stock Exchange fell 114.55 points, to 17 750.68.
The Topix index of all first-section shares fell 10.63 points, to 1 452.04.
Energy explorers were among the biggest losers as crude fell for a second day.
The Topix Energy Resources Index was down 3.46% and among major energy firms, oil explorer Inpex sank 4.94% to ¥1 000.5, while Japan Petroleum Exploration fell 3.67% to ¥3 020.
Toyota fell 0.48% to ¥7 304, and Uniqlo-operator Fast Retailing, a market heavyweight, dropped 1.14% to ¥37 240.
Nintendo was down 0.75% at ¥17 175. After markets closed, the videogame giant said its nine-month net profit fell by nearly a third, largely owing to a year-earlier gain.
Sony dropped 5.06% to ¥2 692.5 after a more than 12% jump the previous day on strong quarterly earnings.
