After the choppy trading session, Japanese shares extended its opening losses to close in the red on Thursday as the news of a fresh US military strike on Iran and Kuwaiti reports of missile attacks hit investor sentiment.
The Nikkei 225 closed down 306.29 points, or 0.5%, at 64,693.12.
News reports quoting US officials said the Central Command forces shot down four Iranian drones that were seen as a threat near the Strait of Hormuz. The US military is also reported to have hit an Iranian ground control station in Bandar Abbas.
Investors are also cautious of the US inflation data that may weigh heavy on bonds and interest rates.
On the domestic front, Japan's major exports to the Middle East plunged in April amid the ongoing war in the region, according to trade statistics released by country's finance ministry on Thursday.
Major exports from the country, including cars and steel pipes, to the Middle East region, fell by 55.8% in value year on year to 138.695 trillion yen in April, affected by the prolonged closure of the Strait of Hormuz.
On the corporate side, six Toyota Motor (TYO:7203)-affiliated auto suppliers, including Denso (TYO:6902), plan to spend a combined 1.16 trillion yen on research and development for the fiscal year ending March 2027, Nikkei Asia reported Thursday, citing company officials.
Also, Sojitz (TYO:2768) plans to bid for public sector projects worth over $6 billion in Australia as part of a bold push into new markets, Nikkei reported on Thursday, citing Sojitz executive Takefumi Nishikawa.