The Nikkei 225 fell 3.06% to close at 56,279, while the broader Topix declined 3.24% to 3,772 on Tuesday, extending the previous session’s losses as escalating tensions in the Middle East drove oil prices higher and intensified global inflation concerns. Japan faces the risk of sluggish growth alongside persistent price pressures, a mix that complicates the policy outlook for the Bank of Japan, even as Deputy Governor Ryozo Himino signaled that the central bank intends to continue raising interest rates. Investors also tracked further developments in the region amid expectations that the US military would intensify strikes against Iran, targeting its missile production facilities, drone programs and naval assets. Nearly all sectors participated in the decline, with sharp losses recorded in index heavyweights such as Fujikura (-3.8%), Toyota Motor (-6.1%), Mitsubishi Heavy Industries (-5.3%), Sony Group (-6.3%) and Hitachi (-5%).