TOKYO, Sept 29 (Reuters) - Japanese stocks ended over 2% lower on Wednesday, tracking overnight losses on Wall Street due to heightened inflation woes, while investors awaited the ruling party's leadership election that would decide Japan's next prime minister.
The Nikkei average fell 2.12% to close at 29,544.29, its lowest since Sept. 3. The index lost most of the gains after outgoing Prime Minister Yoshihide Suga offerd to step down on that day. The broader Topix lost 2.09% to 2,038.29.
The S&P 500 index dropped 2.04% in its biggest single-day fall since May, as deepening concerns about inflation have lifted U.S. borrowing costs.
Just a few minutes after Tokyo's market closed, Fumio Kishida was chosen as the new leader for the ruling Liberal Democratic Party, after a runnoff with Taro Kono as neither obtained a majority in an initial four-way vote, which started earlier in the day.
"Investors want to confirm who is going to be the next prime minister before they start making bets," said Takatoshi Itoshima, a strategist at Pictet Asset Management.
"The focus is on how the market will react to the election results. With a large drop in the Topix this morning, the central bank may step in to support the market."
Heavyweight technology shares led the decline, with Tokyo Electron falling 5.27%, Daikin Industries losing 4.15% and Advantest slipping 5.64%.
Renewable energy firm Renova changed course to lose 3.05% after Kishida won more votes than Kono in the initial vote. Kono's victory was seen positive for renewable energy firms and digitisation-related stocks and negative for electric power companies.
Travel-related shares outperformed on hopes of a surge in demand, as the government plans to lift a coronavirus state of emergency in all regions on Thursday for the first time in nearly six months.
Airlines jumped 2.55%, while all the other sectors among the 33 industry sub-indexes fell.
(Reporting by Junko Fujita and Hideyuki Sano; Editing by Subhranshu Sahu and Rashmi Aich)