TOKYO: Tokyo stocks closed lower Tuesday on concerns over fresh lockdowns in Europe and the prospects for US stimulus, with many investors sticking to the sidelines ahead of corporate earnings.

The benchmark Nikkei 225 index fell 0.96 percent, or 276.11 points, to 28,546.18 while the broader Topix index lost 0.75 percent, or 14.00 points, to 1,848.00.

"The worsening situation in Europe discouraged investors from taking risks today," said Toshikazu Horiuchi, a broker at IwaiCosmo Securities.

European stock markets tumbled Monday amid worries about fresh lockdowns to contain the coronavirus pandemic.

Investors were also concerned about the prospect that the US stimulus could be watered down and not pass for several weeks.

"But the stimulus itself remains sizable and will be seen as a positive factor in the end," Horiuchi told AFP.

Trading was sluggish as investors remained sidelined ahead of the country's corporate earnings season, brokers said.

The dollar fetched 103.74 yen in Asian afternoon trade against 103.77 yen in New York late Monday.

In Tokyo, Toyota dropped 2.30 percent to 7,500 yen with Nissan down 2.02 percent at 538.4 yen.

Construction machine maker Komatsu dropped 2.43 percent to 2,863.5 yen, despite announcing a partnership with US electric vehicle company Proterra to develop battery-powered construction equipment.

But tech components maker Nidec gained 0.55 percent to 14,400 yen after it raised its annual outlook and said it will buy back shares after reporting quarterly profit and sales that topped analysts' estimates.