Japanese shares ended nearly 1% lower on Thursday after hawkish comments from a Bank of Japan board member strengthened expectations for additional interest-rate increases, with persistent inflation risks linked to the Iran conflict weighing on sentiment.
The Nikkei 225 fell 0.98%, or 618.06 points, to close at 62,654.05.
BOJ board member Kazuyuki Masu said rates should be raised "at the earliest stage possible" if data show no clear signs of an economic slowdown, comments that reinforced market expectations for a possible rate increase as early as June.
Masu's remarks came after three other BOJ board members backed further tightening in April despite the central bank keeping rates unchanged, marking the biggest policy split under Governor Kazuo Ueda.
The yen strengthened after Masu's speech and reports that Chinese President Xi Jinping told U.S. President Donald Trump that Taiwan remained the most sensitive issue in China-U.S. relations.
On the corporate front, Eneos Holdings (TYO:5020) fell 4% after agreeing to acquire Chevron's downstream fuels and lubricants businesses across six Asia-Pacific markets for $2.17 billion.
Yamabiko (TYO:6250) slipped 1% after saying it will liquidate its UAE subsidiary due to worsening instability in the Middle East.
Meanwhile, Sony Financial Group (TYO:8729) dropped 5% after fiscal 2025 profit attributable to owners of the parent declined 30% and the company forecast a 16 billion yen attributable loss for fiscal 2026.