TOKYO: Japanese shares ended lower on Monday after Prime Minister Yoshihide Suga said he is considering a state of emergency for Tokyo and surrounding prefectures to contain a spike in local coronavirus infections.

The Nikkei 225 Index ended down 0.68% at 27,258.38 in its first trading session of 2021 - the biggest daily decline in two weeks. The broader Topix fell 0.56% to 1,794.59.

Shares of airlines, transport companies, real estate firms and retailers fell on fears that travel restrictions and shorter business hours will curb consumer spending and hurt the services sector.

Japanese shares rallied in the final days of last year to a 30-year high due to hopes that the approval of coronavirus vaccines would ramp up the global economy's recovery from the pandemic, but a record number of cases in Tokyo and surrounding cities has caused investors to temper their optimism.

The underperformers among the Topix 30 were Central Japan Railway Co down 2.74%, followed by Tokio Marine Holdings Inc losing 1.77%.

The stocks that gained the most among the top 30 core Topix names were Nippon Telegraph and Telephone Corp up 2.57%, followed by Daiichi Sankyo Co Ltd rising 2.26%. There were 37 advancers on the Nikkei index against 185 decliners.