Japanese shares reversed early gains on Monday as caution ahead of the formation of a new government and lingering worries over the China Evergrande debt crisis outweighed positive sentiment stemming from a strong Wall Street finish last week.
Japanese shares tumbled on Friday to one-month lows on mounting fears various supply chain disruptions worldwide could keep inflation elevated for a much longer period.
Japanese stocks dropped over 2% on Wednesday after heightened inflation worries hit Wall Street shares overnight, while investors awaited the Japanese ruling party's leadership election that will decide the country's next prime minister.
Japanese shares erased early gains on Thursday, as investors took a breather after a rally led by hopes of a new political leadership, while energy stocks tracked overnight gains in U.S. peers.
Japan's Topix index hit its highest level in more than three decades on Monday, while the Nikkei also jumped, as investors continued to buy beaten down stocks on hopes of an economic recovery and corporate earnings growth.