At least one person was killed and 32 were missing after the 6.7 magnitude quake paralysed the northern island, triggering landslides and knocking out power to its 5.3 million residents. A nuclear plant, which had been shut, lost power but no radiation incidents were reported.
Hokkaido Electric Power Co tumbled more than 5 percent after it said it conducted an emergency shutdown of all its fossil fuel-fired power plants after the quake.
Tourism-related stocks were also under pressure.
The Nikkei share average dropped 0.5 percent to 22,458.70 points by midmorning.
The broader Topix fell 0.6 percent to 1,695.65.
Declining issues outnumbered advancing ones 1,421 to 588.
“On top of a typhoon early this week hitting the Kansai region, the earthquake is stoking concerns of a possible fall in inbound tourism demand and potential damage to businesses,” said Shogo Maekawa, a global market strategist at JPMorgan Asset Management.
Japan began on Wednesday to clean up after typhoon Jebi killed 11 people, injured hundreds and stranded thousands at Kansai Airport, an important hub for companies exporting semiconductors in western Japan.
Thursday’s decliners included chip equipment makers Tokyo Electron and Advantest Corp which shed 1.1 percent and 2.3 percent, respectively, while TDK Corp declined 1.3 percent.
Companies which benefit from inbound tourism also lost ground. Cosmetics makers Shiseido Co dropped 1.0 percent and Fancl Corp tanked 2.4 percent.
Copper smelter Furukawa dived 8.4 percent after Nikkei Inc., operator of the Nikkei benchmark index, which is set for an annual reshuffle, said on Wednesday that it will delete the stock from the index. - Reuters
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