The key Nikkei 225 index fell 1.97 percent, or 445.34 points, to 22,177.04, suffering the biggest point loss in 2017.

The broader Topix index was down 1.43 %, or 25.55 points, at 1,765.42.

US President is set to recognise Jerusalem as Israel's capital later Wednesday, upending decades of careful US policy and ignoring dire warnings of a historic misstep that could trigger a surge of violence in the Middle East.

"The Jerusalem issue came just when 'Russia-gate' reminded investors of risks over the Trump administration's management," said Makoto Sengoku, market analyst at Tokai Tokyo Research Centre.

Investors have kept a cautious eye on the ongoing FBI probe into allegations of Russian election meddling.

The Jerusalem issue could be "an unsettling factor to the global order" and gave a convenient excuse to sell to investors who had been waiting for an opportunity to reap profits on recent gains," Sengoku told AFP.

It was "a cue for profit-taking," he added.

Sentiment also worsened as other Asian stocks dropped, he said, adding that attention was now shifting to how the US markets would fare on Wednesday.

--AFP--