Higher bond yields triggered selling, with the yield on 40-year bond hitting 4 percent for the first time since 2007 after Takaichi said she will accelerate discussions on reducing the consumption tax on food items for two years.

The Nikkei average fell 1.11 percent to 52,991.10, extending losses for a fourth straight session on growing fiscal concerns and Trump's renewed tariff threats against European allies over Greenland. The broader Topix index settled 0.84 percent lower at 3,625.60.