The Nikkei share average shed 0.5 percent to 20,622.91, after closing at over a one-month high on Monday. The broader Topix shed 0.6 percent to 1,556.43. Declining issues outnumbered advancing ones 1,466 to 573. Isao Kubo, equity strategist at Nissay Asset Management, said there were mounting worries about global growth, and while many people expected the United States and China to de-escalate a trade war they were still awaiting fresh developments.
The International Monetary Fund on Monday cut its world economic growth forecasts for 2019 and 2020 due to weakness in Europe and some emerging markets, and said failure to resolve trade tensions could further destabilise a slowing global economy. The IMF's downgrade came hours after China reported its weakest quarterly growth since the financial crisis and its slowest annual expansion in 28 years, with further cooling expected this year.
Adding to sour sentiment, US stock futures, which indicate how Wall Street will likely open, fell 0.5 percent. US markets were closed on Monday for a holiday. Recent gainers such as machinery makers which have large exposure to China as well as chip-related stocks lost ground, with Fanuc Corp falling 2.1 percent, Yaskawa Electric dropping 2.3 percent and Tokyo Electron shedding 1.8 percent.
Air-conditioning system maker Totech Corp jumped 10 percent after it raised its net profit outlook for the year ending March to 3.6 billion yen from 3.2 billion yen.