Japanese shares fell to a one-week low on Tuesday morning, as traders braced themselves for the Bank of Japan's policy decision amid expectations it could tweak its massive asset-buying.

The benchmark Nikkei share average dropped 0.50 per cent to 22,432.75 in mid-morning trade, with trading activity largely subdued ahead of the BoJ's policy announcement due later Tuesday.

“Despite some positive earnings-related news, the market looks very cautious ahead of the BOJ's decision, including a possible tweak to its ETF buying,” said Yasuo Sakuma, chief investment officer at Libra Investments.

“A continued tech sell-off on Wall Street also soured investors' sentiment.”

Reuters and other media have recently reported that the BoJ mulls ways to make its massive stimulus programme more sustainable and could review the allocation of ETF purchases.

Overnight, a widespread sell-off of technology stocks pushed the three major US stock indexes lower, with the Nasdaq Composite posting its third consecutive loss of more than 1 per cent for the first time in three years.

Bucking the overall weakness, Gurunavi soared 17.5 per cent after e-commerce firm Rakuten had announced a tie-up with the restaurant finder site after the market close on Monday. Rakuten added 1.0 per cent.

Positive earnings also helped some stocks. Capcom jumped 9.1 per cent to its highest level in 18 years after the game maker's net profit for the April-June quarter grew 7.5 times from a year earlier, thanks to a big success of Monster Hunter .

Fancl Corp, TDK Corp and Oriental Land climbed between 2.2 and 5.6 per cent after the companies announced upbeat quarterly results. The broader Topix fell 0.89 per cent to 1,752.33, while the JPX-Nikkei Index 400 was down 0.76 per cent at 15,502.44.

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