Japan's Nikkei share average fell on Tuesday morning as profit-taking from last week's gains hit home and oil-related stocks were sold on lower oil prices.
Sharp Corp defied the weakness and surged as much as 10.1 per cent after Reuters reported that a Japanese government-backed fund is considering a range of options to help turn around the struggling company - including direct investment.
The Nikkei dropped 1.0 per cent to 18,247.25 in mid-morning trade after rising 4 per cent last week.
Investors returned to the market after a three-day weekend in Japan due to a national holiday, and didn't waste their time selling oil-related stocks after oil prices tumbled on Monday. Inpex Corp fell 3.6 per cent and Japan Petroleum Exploration Co shed 1.9 per cent.
Trading houses were also lower, with Mitsubishi Corp shed 2.5 per cent and Mitsui & Co dropped 2.2 per cent.
Oil stumbled 5 per cent as traders took profits after last week's surge to an 11-week high, and on a report that OPEC continued to boost crude production despite a persistent glut.
Airline shares, which benefit from lower fuel costs from cheaper oil, outperformed. ANA Holdings rose 2.2 per cent and Japan Airlines Co gained 2.6 per cent.
Analysts said that while there was a lack of market-moving domestic catalysts, U.S. earnings announcements may set the direction until the end of the month, when many central banks around the world are scheduled to have policy meetings.
"Investors brace for weak earnings, but if U.S. companies give positive surprises, the market may be supported," said Nobuhiko Kuramochi, a strategist at Mizuho Securities.
He also said that investors were focused on China's just-published trade data. "China's imports, which measure domestic demand, are especially closely watched," Kuramochi said.
The broader Topix dropped 0.6 per cent to 1,505.92 and the JPX-Nikkei Index 400 slid 0.7 per cent to 13,499.73.