Japanese stocks were flat on Tuesday morning as a risk-averse mood kept investors sidelined following an explosion in the English city of Manchester, which lifted the safe-haven yen and depressed some export-oriented shares.
The Nikkei share average fell 0.1 per cent to 19,662.91 in midmorning trade.
Airline shares was the worst performer on the board, falling 1.3 per cent on concerns that overseas travel may be hit after a blast at a concert in Britain's city of Manchester killed at least 19 people. Japan Airlines dropped 1.7 per cent and ANA Holdings fell 0.8 per cent.
Also souring sentiment in the travel industry was news that China is investigating six Japanese citizens on suspicion of "illegal activities", China's foreign ministry said on Monday, after Japanese media reported they may have been suspected of spying.
Elsewhere, the domestic earnings season, now at the tail-end, has partly influenced trading in Japanese stocks over the past month.
According to Rakuten Securities, companies expect a 8.3 per cent rise in their net profit for the year through March 2018. The Nikkei is trading at 14 times its projected earnings, and unless the yen strengthens against the dollar significantly and the economy sags, the Nikkei's downside should be limited, Rakuten analysts wrote.
On Tuesday, the dollar was down 0.2 per cent at 111.055 yen after earlier slipping to 110.860, pressuring exporters.
Nissan Motor Co dropped 1.4 per cent, Subaru Corp fell 1.0 per cent and Advantest Corp tumbled 1.6 per cent.
“There are few domestic catalysts as the earnings season is over, so political developments in US and other geopolitical issues surrounding North Korea will likely determine the Japanese market's direction for a while,” said Kazuhiro Takahashi, an equity strategist at Daiwa Securities.
Fujifilm Holdings, which last month postponed earnings announcement over questionable accounting practice at its overseas unit, fell 1.1 per cent to a one-month low. The company said it will announce last fiscal year's earnings after June.
The broader Topix was up 0.1 per cent to 1,568.40 and the JPX-Nikkei Index 400 was flat at 14,004.72.