The Nikkei stock average ended the day down 0.33% at 20,516.56 points.

"Gains by the yen and lingering concerns towards the U.S.-China trade and currency war weighed on the market. The yuan is still above the 7 per dollar and how currency issues pan out is a key concern," said Chihiro Ohta, equity general manager at SMBC Nikko Securities.

"That said, sellers are not entirely dominant as there were some solid corporate earnings as well."

Companies reliant on exports slipped as the yen remained strong against the dollar, staying close to a seven-month high scaled the previous day. The yen is typically seen as a safe-haven during times of market turmoil, and has firmed in recent sessions as the Sino-U.S. trade war suddenly escalated.

Honda Motor Co lost 0.9%, Mitsubishi Electric Corp  shed 1.3% and TDK Corp declined 2.2%.

Earnings reports also continued to buffet trading.

Sumco Corp, a manufacturer of silicon wafers used in semiconductors, sank 9.3% after its operating profit fell 18.4% in Jan-June.

Kirin Holdings Co tumbled 5% after Japan's second-biggest brewer posted a net loss of 7.31 billion yen ($68.8 million) in the Jan-June period.

On the winners ledger, JVC Kenwood Corp soared 15.6% as the maker of car audio and visual systems reported a 77.9% operating profit increase in the April-June quarter.

Renesas Electronics Corp climbed 7.8% after the semiconductor maker's Jan-June operating losses were not as large as anticipated.

Control equipment manufacturer Yokogawa Electric Corp  added 4.9% on reporting an operating profit increase of 37.5% in April-June.

Fancl Corp rose 2.9% after Kirin Holdings said on Tuesday that it would take a 30.3% stake in the cosmetics company.

The broader Topix inched up 0.05% to 1,499.93. Declining shares outnumbered gainers 1,060 to 1,003.