Tokyo stocks closed down 0.48 percent on Monday as markets took a breather with investors locking in profits ahead of the closely-fought US presidential election.
The benchmark Nikkei 225 index at the Tokyo Stock Exchange lost 43.78 points to 9,007.44 while the broader Topix index of all first-section issues fell 0.55 percent, or 4.14 points, to 747.95.
"Ballots count more than earnings reports at the moment," said an equity trading director at a foreign brokerage, adding political situations were in flux in the United States, China, and Japan.
"There is too much change coming for investors to buy the markets with confidence, while earnings and forecast revisions are still serving up rude surprises... The mood is slightly risk-off right now," the trader said.
Markets were paying close attention to the results of Tuesday's US election and a once-in-decade leadership shuffle in China, with both having major political and economic implications.
Japan's Prime Minister Yoshihiko Noda has also seen public support ratings for his government fall below 20 percent in recent surveys and faced opposition calls for immediate elections.
On Monday, Toyota's shares gained 2.22 percent to 3,210 yen following a report by public broadcaster NHK that the automaker was set to hike its annual profit forecast.
After the market close Monday, Toyota raised the figure to 780 billion yen ($9.7 billion) net profit from 760 billion yen expected earlier, despite saying it expected to sell fewer cars due to weakness in Europe and China.
Toyota's profit upgrade came as automakers suffer from a strong yen and falling sales in China caused by strained Sino-Japanese ties over the ownership of an East China Sea island chain.
Toyota rival Nissan, which will announce its financial results on Tuesday, rose 0.72 percent to 691 yen, while Honda, which was sold last week after slashing its annual profit outlook, climbed 1.21 percent to 2,497 yen.
Sharp tumbled 6.66 percent to 154 yen after Fitch slashed its credit rating to junk last week as the struggling consumer electronics giant faces a worrying cash-flow crisis.
Panasonic fell 5.59 percent to 388 yen after saying last week it would lose more than $9.0 billion in the year to March owing to a massive restructuring.
In currency trading, the dollar changed hands at 80.43 yen in Tokyo, from 80.47 yen late Friday in New York, where the jobs data helped push it to 80.68 yen at one stage, its highest level since late April.
The euro bought $1.2832 and 103.16 yen, from $1.2835 and 103.30 yen.
-- Dow Jones Newswires contributed to this article --