"When the United States is involved, it is simply not just geopolitical risk as the Trump presidency had come with hopes for stimulus attached," said Soichiro Monji, chief strategist at Daiwa SB Investments.

"As for the Japanese market, any impasse in U.S. policies would be negative. But there could be positive aspects, such as trade negotiations with Japan taking a back seat."

The prospect of Trump potentially taking a tough trade stance against Japan was a big worry for local investors.

Takata Corp rose 20 percent after four automakers including Toyota Motor Corp agreed to a $553 million settlement to address claims covering owners of nearly 16 million recalled vehicles with potentially defective Takata airbag inflators.

Biofuel developer Euglena Co rose as much as 10.7 percent after the Nikkei newspaper reported that Euglena was arranging equity tie-ups with five companies to speed up efforts to commercialise jet fuel produced from microalgae.

Totenko Co and K.K. Seiyoken gained 4.9 percent at 7.1 percent, respectively, after reports that a giant panda at Tokyo's Ueno Zoo had shown signs of pregnancy.

The animal is a crowd favourite and a birth of a baby panda is expected to boost business for the two companies, which operate restaurants around the zoo.

The broader Topix slipped 0.15 percent to 1,552.87 and the JPX-Nikkei Index 400 was down 0.1 percent at 13,863.24. (Reporting by Shinichi Saoshiro; Editing by Eric Meijer)