Tokyo stocks closed lower Friday with Japan set to extend a virus state of emergency in the capital as cases surge a week into the pandemic-postponed Olympics.
The benchmark Nikkei 225 index dropped 1.80 percent, or 498.83 points, to 27,283.59, while the broader Topix index lost 1.37 percent, or 26.35 points, to 1,901.08.
"Even though sound gains on Wall Street are providing some support, the market is weighed down by worries over the expansion in new virus cases in Japan," Okasan Online Securities said.
Daiwa Securities chief technical analyst Eiji Kinouchi also said: "The recent spike in coronavirus infections is a psychologically negative factor for the market."
Japan is on Friday expected to expand a virus state of emergency from Tokyo and the southern Okinawa region to several other areas, and extend the measures to the end of August.
Daily infections nationwide topped 10,000 for the first time on Thursday, with Tokyo reporting a record 3,865 cases.
Traders' eyes are also on corporate earnings reports being released this week, analysts added.
"Investors are carefully and cautiously digesting results," Kinouchi told AFP, adding that "some shares fell despite their favourable earnings".
The dollar fetched 109.54 yen in Asian afternoon trade, against 109.48 yen in New York late Thursday.
In Tokyo, Panasonic was down 3.29 percent to 1,305.5 yen on profit-taking after it reported a better-than-expected first-quarter operating profit but left its annual forecast unchanged.
Industrial robot maker Fanuc dropped 6.21 percent to 24,380 yen, also on profit-taking, after it raised its full-year operating profit forecast.
ANA fell 0.87 percent to 2,563.5 yen. Following the closing bell, the airline said it had trimmed its first-quarter loss by more than half on strong sales in the three months to June. The firm left its full-year outlook unchanged.