Total 25 subsectors out of 33 subsectors of the Topix's index declined, with Oil & Coal Products, Mining, Precision Instruments, Nonferrous Metals, and Chemicals issues being notable losers, while Fishery, Agriculture & Forestry, Electric Power & Gas, and Retail Trade issues were notable gainers.
Market participants initial enthusiasm over the latest U.S.-China trade truce was overtaken by fresh concerns over Washington's threat of tariffs on additional European goods particularly in a long-running dispute over aircraft subsidies. The United States proposed new tariffs on $4 billion worth of goods imported from the European Union. The newly proposed tariffs promise to add to the pain, as the EU economy is heavily driven by exports.
The new wave of proposed duties comes amid a 15-year dispute at the World Trade Organization over aircraft subsidies given to U.S. aerospace manufacturer Boeing and its European rival, Airbus. In a speech given Tuesday, Bank of England Governor Mark Carney warned that existing trade tensions could shipwreck the global economy or prove to be a tempest in a teacup.
The U.S. Commerce Department also said Tuesday that tariffs would be imposed on steel from Vietnam that was originally produced in South Korea or Taiwan, saying that those had circumvented U.S. anti-dumping and anti-subsidy duties.
On the U.S-China front, however, U.S. President Donald Trump and Chinese President Xi Jinping agreed not to impose new tariffs on each other's goods after the two met at the G-20 summit in Osaka, Japan.
Shares of oil-linked companies were lower following a slump in crude prices, with oil developer JXTG dropping 2.9% to 526.3 yen and Japan Petroleum Exploration fell 3.2% to 2,464 yen.
Chip makers also dropped, with chip-testing equipment maker Advantest falling 4.7% to 3,025 yen and SCREEN Holdings 4.1% to 4,880 yen.
Banks were lower on worries over sagging profits as yields on the US long-term bond remained low. Mitsubishi UFJ Financial was down 1% at 519.1 yen and Sumitomo Mitsui Financial 0.9% at 3,824 yen.
ECONOMIC NEWS: Japan's services activity maintains growth momentum-- Japan's services sector continued its growth trend in June. A sluggish overseas sale was outweighed by improved demand conditions within the domestic economy. The seasonally adjusted Business Activity Index increased to 51.9 in June, from 51.7 in May. The Jibun Bank Japan Services PMI is compiled by IHS Markit from survey responses from a panel of around 400 service sector companies.
CURRENCY NEWS: Japanese yen, often seen as a safe-haven currency, appreciated against greenback on Wednesday. The Japanese yen, viewed as a safe-haven currency, traded at 107.59 against the dollar after strengthening from levels above 108.0 in the previous session.
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