Yen's Strength Weighs on Japanese Stocks as Rate Hike Looms

Japanese stocks struggled for direction on Tuesday as the yen strengthened to its strongest level since February.

The Nikkei 225 Index edged up 0.4% to trade above 66,700, while the broader Topix Index fell 0.6% to around 4,100.

A stronger yen makes Japanese assets more expensive for overseas investors and weighs on earnings prospects for Japan's export-oriented industries.

Markets are also preparing for an expected Bank of Japan rate hike, supported by strong economic data showing July wages rose at their fastest pace since 1997 and second-quarter GDP growth was revised higher.

Oil prices continued to rise due to renewed US-Iran fighting, keeping inflation risks and interest rate concerns in focus.