Japanese stocks began 2015 on a down note on Monday as investors showed little taste for risk given weak prospects for global growth and a sombre Wall Street performance on Friday, but the mood towards Japan's outlook remained upbeat after last year's gains.
The Nikkei benchmark was down 0.5 per cent at 17,356.92 as of 07.37 a.m., after slipping more than 1 per cent to its lowest since December 19.
"People are selling on the back of weak international signs," said Tetsuro Ii, president of Commons Asset Management, citing concerns about growth prospects in the eurozone and in emerging markets.
In an interview with the German financial daily Handelsblatt, European Central Bank President Mario Draghi reiterated the ECB's readiness to act early this year should inflation remain too low for too long.
Economists forecast that data for December, due on Wednesday, will show the first drop in prices in the eurozone since 2009.
Markets saw Draghi's comments as an indication of monetary stimulus to come, pushing the euro down to a nine-year low versus the dollar.
The ECB holds its first policy meeting of the year on January 22.
Despite international concerns, investors are largely positive about prospects for Japanese stocks in 2015. The Nikkei gained 7.1 per cent in 2014, driven by aggressive asset purchases by the Bank of Japan and a weaker yen that boosted corporate profits.
And with Prime Minister Shinzo Abe's political position secure after a landslide election victory last month and a postponement of a second sales tax hike until April 2017, investors see few obstacles in the way of a further boost for Japanese equities from the BOJ's ultra-easy monetary policy, which is seen as continuing throughout the year.
"2015 is as good a chance for the Japanese economy, unfettered by a sales tax rise, as it'll ever get," said Stefan Worrall, director of cash equities at Credit Suisse in Tokyo.
NTT Corp was one of the leading losers on the Nikkei, dropping 2.1 per cent. Exporters' shares were also down, with Toyota Motor Corp slipping 0.9 per cent and Panasonic Corp falling 0.2 per cent.
JVC Kenwood Corp offered some respite, climbing 11 per cent after the Nikkei business daily reported that it had developed a driver support system that utilises high-quality cameras.
The broader Topix shed 0.6 per cent to 1,399.33, while the JPX-Nikkei Index 400 fell 0.7 per cent to 12,681.43.
(Copyright: Thomson Reuters 2015)