Tokyo Stock Exchange’s benchmark Nikkei Average has plunged more than 7 percent following a broad sell-off in New York at the end of last week.
Tokyo stocks opened sharply lower on Monday morning, with the Nikkei 225 tumbling over 2,500 points at one stage.
Shares have been under heavy selling pressure since last week, when the Nikkei lost more than 3,000 points in the two trading days through Friday.
Stocks fell across the board on Monday as weaker-than-expected US jobs data released Friday stoked further fears that the world’s largest economy is weakening.
The yen’s appreciation added to the downward pressure. The Japanese currency strengthened to a seven-month high against the dollar, briefly reaching the upper 144-yen level.
The prospect of a narrowing interest-rate gap between Japan and the United States is prompting investors to sell the dollar and buy the yen.
Worries over a possible slowdown in the US economy is adding fuel to investors’ views that the Federal Reserve may quicken the pace of rate cuts.
Meanwhile, speculation is rife that the Bank of Japan may raise rates again this year.