The Nikkei 225 index has closed at 10,202.63, down 93.84 points, led by declines in bank stocks.
Dealers say this was due to receding optimism about the outcome of the government's anti-deflation package, to be released tomorrow.
The US dollar was at 133.91 yen in Tokyo trading, up from 133.80 in late New York trading; and at 0.87 against the euro, compared with 0.8691 in New York.
The US 4-7/8% 10-year note was at 100-3/32, yielding 4.865%, compared with 100-7/32, yielding 4.847%, in late New York trading.