People stand in front of a stock quotation board displaying the Nikkei share average’s current, opening, high, and low prices outside a brokerage in Tokyo, Japan, September 9, 2025. REUTERS/Kim Kyung-Hoon
People stand in front of a stock quotation board displaying the Nikkei share average’s opening, high, and low prices outside a brokerage in Tokyo, Japan, September 9, 2025. REUTERS/Kim Kyung-Hoon

By Rocky Swift and Kevin Buckland

TOKYO (Reuters) - Japan's Nikkei share average ended lower on Tuesday, dragged by a stronger yen and profit-taking after the index climbed past the key 44,000 mark earlier in the session.

The Nikkei 225 Index surged as much as 1.24% to an unprecedented 44,185.73 before closing 0.4% lower at 43,459.29, snapping a three-day rally. The broader Topix finished the day down 0.5%.

Shares started strong, continuing sharp gains from Monday, on prospects for increased government spending following the resignation of fiscal hawk Prime Minister Shigeru Ishiba.

"We think the government is likely to adopt a more expansionary stance in the fiscal debates from the autumn, given the need to secure the cooperation of one or more opposition parties, all of which are calling for procyclical fiscal policy," BofA Securities analysts said.

Stocks lost momentum as the yen strengthened, rising as much as 0.5% to 146.82 against the U.S. dollar, denting earnings prospects for exporters.

Japan's chief trade negotiator Ryosei Akazawa said in a post on X that U.S. tariffs on Japanese autos are set to be lowered by September 16, clearing up ambiguity over a trade deal sketched out in July.

But Akazawa said the most-favoured-nation status for pharmaceuticals and semiconductors have not been included in an executive order signed by U.S. President Donald Trump.

Takeda Pharmaceutical, Japan's biggest drugmaker, slid 3%.

Citizen Watch sank 5.5%, among the biggest losers on the Nikkei. The index compiler said after the close on Monday that Citizen would be removed from the Nikkei 225 from October.

The Nikkei's biggest gainer was chip-testing equipment maker and Nvidia supplier Advantest, which jumped 6.5% to a new record high.

Other notable risers included chip-making tool manufacturers Screen Holdings, which jumped 2.4%, and Tokyo Electron, which added 2%.

(Reporting by Rocky Swift and Kevin Buckland; Editing by Alan Barona and Rashmi Aich)