TOKYO, Jan. 18 (Xinhua) -- Tokyo stocks closed lower Tuesday as a decline in U.S. stock futures triggered selling, while the rapid rise in COVID-19 cases here and the possibility of business restrictions contributed to a downbeat mood.
The 225-issue Nikkei Stock Average lost 76.27 points, or 0.27 percent, from Monday to close the day at 28,257.25.
The broader Topix index of all First Section issues on the Tokyo Stock Exchange, meanwhile, fell 8.33 points, or 0.42 percent, to finish at 1,978.38.
Local brokers said that trading got off to an upbeat start following rallies on European markets overnight, but sentiment turned negative as U.S. stock futures declined, although losses were capped by the outcome of the Bank of Japan's (BOJ) two-day policy setting meeting.
"A drop in U.S. stock futures triggered selling, after investors were relieved that the BOJ's outcome was not as hawkish as they had expected," Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management Co., was quoted as saying.
Dealers here said however that the BOJ upwardly revising its economic and inflation estimates and maintaining its monetary policy at the conclusion of its policy setting meeting, was well-received by market players.
The bank said in a report that it forecast the core consumer price index (CPI), excluding volatile fresh food items, would increase 1.1 percent in fiscal 2022. This is an upward revision from an initial projection of a 0.9 percent increase.
The economic growth outlook for fiscal 2022 was also raised by the central bank from an initial 2.9 percent forecast in October, to 3.8 percent.
"A pickup in Japan's economy has become evident as the impact of COVID-19 at home and abroad has waned gradually," the BOJ said in the quarterly outlook report.
As noted by market strategists, the BOJ's CPI upgrade to 1.1 percent from a previous projection of 1.0 percent, however, is still a long way off the bank's lofty 2.0 percent inflation target.
Local analysts also pointed to local reports Tuesday that numerous prefectures in Japan may be put under quasi-emergency measures due to surging numbers of COVID-19 cases nationwide as contributing to a circumspect market mood.
Earlier this week, Tokyo, Saitama, Chiba, Kanagawa, Gifu and Mie prefectures requested to be put under a quasi-state of emergency.
Aichi, Nagasaki, Kumamoto and Miyazaki prefectures, made similar requests on Tuesday, local media reported.
Meanwhile, Niigata and Gumma prefectures may also make the request.
Hiroshima, Yamaguchi and Okinawa have been under a quasi-state of emergency since earlier this month.
The new declaration, the sources said, could come into effect from Friday and last for around three weeks.
Once the declaration comes into effect, a number of business sectors will likely be adversely affected, analysts said, including the service industry and transportation sector.
As such, air transportation issues took a dive, on concerns the rapid spread of COVID-19 will impact travel plans, with ANA Holdings losing 0.4 percent, while Japan Airlines dropped 0.9 percent.
Panasonic was among the day's decliners, relinquishing 0.7 percent, while drugmaker Shionogi lost 1.2 percent as investors weren't swayed by reports that a COVID-19 vaccine's developing here has entered the final stage of clinic trials.
Nikkei heavyweight SoftBank Group slipped 0.4 percent, although other heavily weighed issues, Uniqlo casual clothing chain operator Fast Retailing and industrial robotics maker FANUC added 2.4 percent and 0.5 percent, respectively, helping cap losses.
Energy-oriented issues extended gains, meanwhile, with oil exploration behemoth Inpex gaining 1.7 percent, while refiner Eneos Holdings added 0.8 percent.
By the close of play, iron and steel, pulp and paper, and rubber product issues comprised those that declined the most, with falling issues outpacing rising ones by 1,557 to 538 on the First Section, while 89 ended the day unchanged.
On the main section on Tuesday, 1,226.57 million shares changed hands, rising from Monday's volume of 995.87 million shares.
The turnover on the second trading day of the week came to 2,812.53 billion yen (24.54 billion U.S. dollars). ■