TOKYO (Reuters) -- Japan's Nikkei share average posted its sharpest drop in more than four months on Monday, ending at a two-week low, after a bigger-than-expected U.S. inflation spike in May sent Wall Street sharply lower on the weekend.
The Nikkei index fell 3.01% to close at 26,987.44, in its biggest fall since Jan. 27. The index also hit its lowest level since May 27.
The broader Topix lost 2.16% to 1,901.06.
U.S. stocks posted their biggest weekly drop since January on Friday and ended sharply lower on the day, as a steeper-than-expected rise in U.S. consumer prices in May fueled fears of more aggressive interest rate hikes by the Federal Reserve.
"Investors were concerned that ongoing inflation is more persistent than they had expected and global central banks would have to take tighter measures to contain it," said Ikuo Mitsui, fund manager at Aizawa Securities.
Chipmaking equipment producer Tokyo Electron fell 5.26% and was the biggest drag on Nikkei, followed by technology investors SoftBank Group, which tanked 6.85%. Air conditioner maker Daikin Industries lost 4.61% and a robot maker Fanuc fell 3.64%.
Bucking the trend, Kansai Electric rose 2.61% and was the top gainer on Nikkei after the nuclear power plant operator said it would restart a reactor in August, two months ahead of its previous plan.
"Japan has some positive cues and its fundamentals are relatively firm, with reopening of the economy and the weakened yen," Mitsui said.
Department store chain Takashimaya rose 0.66% and airliner ANA Holdings rose 0.41%, as Japan eases restrictions on overseas travelers.
Of the Nikkei components, 189 stocks fell, while 32 rose.
The volume of shares traded on the Tokyo Stock Exchange's main board was 1.24 billion, compared to the average of 1.36 billion in the past 30 days.