Japanese stocks ended in negative territory on Wednesday after the shock resignation of Prime Minister Shinzo Abe, with the Nikkei average down 0.5 percent as thin trade and political uncertainty took their toll.
The afternoon's see-saw trade, which saw the Nikkei touch both its high and low for the day as the news about Abe emerged, reflected the mixed nature of the event, traders said.
"Abe has lost binding political energy, and with rumours in the market that a snap election might be near, a lot of negative factors have been eliminated," said Hiroyuki Fukunaga, chief strategist in the research division at Rakuten Securities. "But until the next prime minister is named, political uncertainty will weigh on the market."
Shares elsewhere in Asia rose on the back of strong energy stocks after US crude hit a record closing high the previous day and expectations that the US Federal Reserve will lower its benchmark interest rate next week.
MSCI's measure of Asia Pacific stocks excluding Japan was up 0.4 percent at 0819 GMT, with political uncertainty the main culprit for Japan's underperformance. The Nikkei average ended down by 80.07 points at 15,797.60, while the broader TOPIX index was down 0.27 percent at 1,528.27.
Trade was thin with 1.7 billion shares changed hands, compared with a daily average volume of 2.3 billion shares in August. Decliners beat advancers by 965 to 639. Abe is expected to stay on in a caretaker role until a new prime minister is chosen. Taro Aso, a close Abe ally who is secretary-general of Abe's ruling Liberal Democratic Party, is generally seen as a front runner.
Banking shares slid, with Sumitomo Mitsui Financial Group down 3 percent at 818,000 yen and Mizuho Financial Group down by 2.4 percent, both underperforming the banking sub-index, which slid by 1.7 percent.
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