Tokyo stocks retreated Thursday as uncertainties over U.S. politics dampened investor sentiment.

The 225-issue Nikkei average of the Tokyo Stock Exchange fell 165.19 points, or 0.70%, to end at 23,474.27. On Wednesday, the key market gauge finished up 72.42 points.

The Topix index of all TSE first section issues finished 17.81 points, or 1.09%, lower at 1,619.79 after climbing 11.86 points the previous day.

The Tokyo market fell from the outset after an overnight decline on Wall Street, as investors grew pessimistic of the chances that a fresh coronavirus relief package in the United States will be agreed on before the Nov. 3 presidential election.

The decline in investor confidence was compounded by a drop in Dow Jones Industrial Average futures just before the opening bell in Tokyo, in response to news that Iran and Russia are seeking to interfere in the U.S. election.

The strengthening of the yen versus the dollar, triggered by the euro's appreciation against the U.S. currency on the back of high demand for newly issued European Union bonds, also pushed down the stock market.

Stocks struggled for direction for much of the day as investors opted to stand on the sidelines ahead of major market-moving events, such as the next and last U.S. presidential debate between Republican incumbent Donald Trump and Democratic Party challenger Joe Biden on Thursday and the series of domestic corporate earnings announcements next week, brokers said.

"Investors are hoping for earnings reports showing that business performances bottomed out in April-June and rebounded in July-September, but they are taking a wait-and-see approach as they cannot be sure until the earnings are released," Hirohumi Yamamoto, strategist at Toyo Securities Co., said regarding the lack of active trading.

Yamamoto added that market players were encouraged by upward revisions to April-September earnings estimates released by biotechnology company Takara Bio and electronic parts maker Rohm earlier this week, which showed signs of upturns from the nadir of the coronavirus crisis.

Kazuo Kamitani, Nomura Securities Co.'s senior associate at the Investment Research & Investor Services Department, said that investors are also watching out for potential scandal-like news to add more uncertainty to the U.S. race, such as those involving Hunter Biden, the son of the Democratic Party's presidential candidate.

Falling issues outnumbered rising ones 1,730 to 388 in the TSE's first section, with 62 issues unchanged. Volume decreased to 863 million shares from Wednesday's 943 million shares.

ANA Holdings dived 4.08% after media reports that the airline group is set to log a record net loss in the fiscal year through March next year.

Pharmaceuticals Chugai and Eisai shed 3.46% and 2.51%, respectively,

Other losers included railway operators JR Tokai and JR East.

On the other hand, Hino Motors gained 4.99% after announcing that it has concluded a deal to jointly set up a company with China's BYD for producing electric vehicles.

Baby goods retailer Nishimatsuya Chain climbed 3.08% after posting strong sales for October.

In index futures trading on the Osaka Exchange, the key December contract on the Nikkei average dropped 150 points to 23,500.

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