Japanese shares closed Monday's session lower amid expectations of prolonged high U.S. interest rates.
The Nikkei 225 retreated 3.9%, or by 2,563.52 points, to end at 64,024.60.
Investor sentiment was also dampened by the rise in oil prices on Monday, adding to concerns over inflation, after a flare-up of tensions between Iran and Israel over the weekend. The two countries exchanged strikes for the first time since a ceasefire was agreed between them in April.
On the domestic front, Japan's economy expanded at an annualized rate of 1.8% in the first quarter. The reading was softer than the preliminary estimate of a 2.1% increase, and against the 0.7% growth in the previous quarter, according to Cabinet Office data released on Monday.
On the corporate side, shares of Tomoe Engineering (TYO:6309) closed 5% higher after the company raised its earnings forecast for the fiscal year ending Oct. 31, with projected net income increasing to 4.4 billion yen from 4.2 billion yen.
Meanwhile, Sparx (TYO:8739) said its assets under management rose 6.8% from a month earlier to 2.601 trillion yen in May. The company's shares closed down over 1%.