Picture used for illustrative purpose. File

Tokyo stocks closed lower Tuesday as investors reaped profits on rebounds while waiting for earnings from major companies later in the week.

The key Nikkei 225 index dropped 0.26 per cent, or 58.47 points, to end at 22,657.38, extending its losing streak to the third trading day.

The broader Topix lost 0.48 per cent, or 7.57 points, to 1,569.12.

After opening flat, share prices staged a rebound largely on rises in technology issues, only to be met with profit-taking.

"Profit-taking became dominant in the afternoon session as investors grew cautious" after seeing the Nikkei lose steam above 22,800, Okasan Online Securities chief strategist Yoshihiro Ito said in a note.

The yen's rise took a breather, with the dollar trading at 105.55 yen against 105.38 yen in New York Monday afternoon. 

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The main highlights of the week will likely be the US Fed forward guidance on Wednesday, along with a raft of earnings releases, including Amazon, Apple and other tech heavyweights, said Stephen Innes, global market strategist at AxiCorp.

"How much appetite traders have to add on risk is probably limited.

"But this is not a typical market with so much health and economic headline risk so best to keep on your toes," he said in a commentary.

Nissan Motor lost 4.33 percent to 410.8 yen ahead of its announcement of April-June earnings.

Mitsubishi Motors plunged 12.63 percent to 235 yen after forecasting a larger-than-expected loss for the current business year.

Fujifilm Holdings climbed 3.09 percent to 4,925 yen on news that the US government is providing funds to a US subsidiary for a new coronavirus vaccine.

Daiichi Sankyo shot up 10.28 percent to 9,557 yen after the drugmaker announced a global collaboration with AstraZeneca for development and commercialisation of an experimental cancer drug.

SoftBank Group rose 2.24 percent to 6,645 yen.

Agence France-Presse