At closing bell, the 225-issue Nikkei Stock Average stumbled 684.22 points, or 2.53%, to 26,319.34. The broader Topix index of all First Section issues on the Tokyo Stock Exchange dropped 37.52 points, or 1.96%, to 1,878.39.
Shares of Uniqlo store operator Fast Retailing was among the biggest losers as China tightened COVID-19 lockdowns, worsening the outlook for sales in the country.
Japan Steel Works shares tumbled 18.8% after revealing that a subsidiary had doctored product data, starting from 1998.
Shares of JFE plunged 9% after it refrained from giving a forecast for the current fiscal year in after-the-bell earnings on Friday, citing an uncertain outlook.
In economic news, the final au Jibun Bank Japan Services Purchasing Managers' Index (PMI) rose to a seasonally adjusted 50.7 from the previous month's final of 49.4. That was also better than a 50.5 flash reading for April, as consumer sentiment recovered after the government lifted coronavirus curbs following a decline in domestic Omicron infections. The composite PMI, which is calculated using both manufacturing and services, expanded to 51.1 from March's 50.3 final.
Meanwhile, minutes of the March 17-18 Bank of Japan's March policy meeting revealed that board members called for measures to prevent an increase in long-term interest rates. Several in the nine-member board said some big firms were raising wages and companies were more eagerly passing on rising raw material costs to households, which could put upward pressure on consumer inflation, the minutes showed. But most others in the board warned of heightening risks to Japan's economy from the Ukraine crisis that would keep inflationary pressure subdued, the minutes showed. Unlike the United States and the United Kingdom, Japan was not in a situation where the inflation rate would likely exceed the BOJ's 2% price target in a sustained manner, some members were quoted as saying in the minutes. It was therefore important for the BOJ to continue with monetary easing to support the economy's recovery from the pandemic, they said.
CURRENCY NEWS: The Japanese yen traded at 131.09 per dollar, weaker as compared with levels below 129 seen against the greenback last week.
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