The focus of Asian markets on Monday was on Japan after Prime Minister Shinzo Abe’s coalition won a snap election on Sunday.
However, despite the widely-expected win, the Nikkei 225 closed down 1.6% at 17,099.40 as the latest Tankan business survey disappointed the market.
Confidence among big manufacturers fell slightly, the Tankan showed.
It also found that while exporters have been helped by the weak yen, higher import costs have hit other firms.
On the currency markets, the US dollar was trading at 118.32 yen after earlier dropping as low as 117.78.
Rest of Asia
In Greater China, Hong Kong’s Hang Seng index ended 1% lower at 23,027.85.
But mainland shares bucked the trend, with the benchmark Shanghai Composite Index rising 0.5% to 2,953.42.
In Australia, news of a hostage siege in Sydney, meant the the country’s budget forecast announcement was delayed by a few hours.
Several people have been taken hostage by a gunman in a Sydney cafe.
The government said it expected the nation’s deficit to grow to $40.4bn Australian dollars ($33.2bn) in the 12 months to June, up from a previous forecast of A$29.8bn.
The country’s treasurer Joe Hockey said falling prices for key resource exports were hurting the economy.
The benchmark S&P/ASX 200 closed down 0.6% at 5,186.10 points.
In South Korea, shares headed lower after data showed exports in November fell 2.1% from a year ago, worse than a provisional 1.9% decline reported earlier.
The benchmark Kospi was closed down 0.07% at 1,920.36 points.