TOKYO, Dec 30 (Reuters) - Japanese stocks dropped in early trade on Monday, the last trading day of the year, as investors booked profits ahead of New Year holidays, though the Nikkei share average was on course to log an annual gain after the previous year's loss.
The Nikkei share average fell 0.49% to 23,721.91, while the broader Topix lost 0.44% to 1,725.58.
On the year, the Nikkei was up 18.5% after a 12% drop in the previous year, while the Topix was 16.5% higher after shedding nearly 18% in 2018.
As Japanese financial markets will be closed from Tuesday through Friday to reopen next Monday, market players were eager to close their positions.
A broad range of shares fell, with all of the Tokyo Stock Exchange's 33 industry subindexes in the negative territory.
Some said market sentiment was also not helped by rising political tensions in North East Asia and air strikes in the Middle East.
North Korean leader Kim Jong Un called at a ruling party meeting for "positive and offensive measures" to ensure security ahead of a year-end deadline he has set for denuclearisation talks with the United States.
The U.S. military carried out air strikes in Iraq and Syria on Sunday against Iran-backed militia group in response to the killing of a U.S. civilian contractor in a rocket attack on an Iraqi military base.
Shares of Ishikawa Seisakusho, a tiny manufacturer of defence goods, jumped 5.8%.
Elsewhere, Adastria dropped 6.6% after the casual clothing shop operator's quarterly earnings and profit guidance for the year ending in February fell short of market expectations.
Parco rose 10% to edge near the tender price offered by J. Front Retailing, which has announced a plan to wholly own the company last week.
Leopalace21 climbed 2.6% after activist investors requested the scandal-tainted apartment builder sack all of its 10 board members. (Editing by Subhranshu Sahu)