Shinzo Abe has plunged Japan into political crisis by announcing his resignation only two days after parliament reconvened.
The Japanese Prime Minister abruptly announced his resignation today after a year in power dogged by scandals, an election rout and a crisis over Japan's support for US-led operations in Afghanistan.
The yen and stocks slipped on concerns about the political uncertainty.
Abe is expected to stay on in a caretaker role until a successor is chosen from his Liberal Democratic Party (LDP).
He had indicated that he would step down if he failed to extend a Japanese naval mission supporting U.S.-led operations in Afghanistan, but the timing of his move was unexpected.
The Nikkei average ended 0.5% lower in Tokyo on the news.
'One of the reasons why Japanese stocks have been underperforming, compared to other global markets, was political uncertainty,' said one analyst.
Analysts said Japanese stocks would remain under selling pressure until Abe's successor is announced.
