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Japanese stocks slumped as yen strength persisted, while shares elsewhere in Asia were choppy.

Japan's Nikkei Stock Average was off 2.3% Thursday, Australia's S&P/ASX 200 was down 0.9% and the Shanghai Composite Index slipped 0.2%. Korea's Kospi and Hong Kong's Hang Seng Index were both up 0.1%.

Stocks in Japan fell as the yen extended gains against the U.S. dollar. The currency had strengthened late Wednesday after Prime Minister Shinzo Abe put off a national sales-tax increase, scheduled for next year, until October 2019.

"People are pessimistic regarding this delayed tax," said Margaret Yang, market analyst for CMC Markets. "Japan has a relatively high GDP-to-debt ratio. If they can't increase [the] tax rate, they may not be able to reduce debt burden further."

The yen was as strong as 108.93 to the U.S. dollar during early Asian trading hours. A stronger currency makes Japanese exports less competitive and erodes the repatriated earnings of Japanese exporters. Shares of Toyota Motor Corp. were down 1.1%, Nissan Motor Corp. was 1.9% lower and Honda Motor Co. was off 3%.

"I think the postponement of the sales tax hike may have led to less expectations of more monetary easing" at the Bank of Japan's policy meeting mid-June, said Qi Gao, a currency strategist for Scotiabank.

Easing policies are designed in part to weaken the yen and boost the economy, so the delay triggered an unwinding of bearish yen bets, analysts said.

In China, the main stock benchmark in Shanghai looked on track to book a fourth consecutive day of gains. Analysts said it was partly due to continuing hopes that global index provider MSCI will soon add mainland-listed stocks to an influential index.

"In the short-term, MSCI hopes will provide some buffer, some cushion to equity markets in Hong Kong and Shanghai," Ms. Yang said.

After U.S. stocks closed little changed overnight in thin trading, analysts said markets in Asia had little direction to move higher. An improvement in U.S. manufacturing activity data overnight offset pessimism over a fall in U.S. construction spending, but signs that the U.S. economy is recovering didn't boost stocks.

On Thursday, traders in Asia were also waiting for an Organization of the Petroleum Exporting Countries meeting later Thursday in Vienna, where an oil production ceiling could be on the table.

In other markets, most Asian currencies were, like the yen, strengthening against the dollar, including the Korean won and Singapore dollar. The ringgit, though, weakened as more funds increased the size of their hedges against the risk of currency depreciation and holdings of Malaysian government bonds, traders said.

Hiroyuki Kachi and Ewen Chew contributed to this article.

Write to Dominique Fong at Dominique.Fong@wsj.com

(END) Dow Jones Newswires

June 02, 2016 00:45 ET (04:45 GMT)

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