TOKYO, May 24 (Reuters) - Japanese stocks fell on Tuesday as uncertainty on whether Tokyo would intervene to weaken the yen over U.S. objections sapped confidence, while worries over fiscal policy and a pending decision on a sale tax hike sent turnover to its lowest level this year.
The Nikkei share average dropped 0.9 percent to 16,498.76.
Appetite for risk was weakened by receding expectations that Japan can act to weaken its currency after a fresh warning from the United States last week against intervention. That sentiment was reinforced by comments from Japanese Finance Minister Taro Aso, who said on Tuesday that Japan has no intention to devalue the yen sharply and consistently.
The broader Topix fell 0.9 percent to 1,326.50, with turnover hitting 1.67 trillion yen, the lowest since last December. Thin trading value has been a recent trend, with May 18 being the only day in the past week when turnover rose above 2 trillion yen.
Traders said that the Nikkei share average is expected to stay sluggish and trade is likely to be thin for now until the market sees clear directions on fiscal policies as well as on whether the government will go ahead with a planned sales tax hike.
"The market is easily swayed by conflicting headlines on tax hike and fiscal measures," said Hikaru Sato, a senior technical analyst at Daiwa Securities.
On Tuesday, Deputy Chief Cabinet Secretary Koichi Hagiuda told Reuters in an interview that raising Japan's sales tax to 10 percent from 8 percent as planned from April would be the best way to win the trust of international investors, unless special circumstances intervene.
All but two of the Topix's 33 subsectors were in negative territory.
The JPX-Nikkei Index 400 declined 1.0 percent to 11,974.59. (Reporting by Ayai Tomisawa; Editing by Shri Navaratnam)