The benchmark Nikkei 225 stock index fell more than 800 points, or 2.5 percent, in early Tokyo trading on Thursday. The slide follows an overnight drop in New York where investors remain concerned about a possible recession in the US.
Sell orders flooded in right after the opening bell on the Tokyo Stock Exchange.
Investors say the worries about a sharp slowdown in the US economy are compounded by the risk of a broader conflict in the Middle East.
The Nikkei 225 has been on a volatile ride all week, with the added concern of higher interest rates in Japan. On Monday it posted its biggest-ever drop. That was reversed on Tuesday with a record one-day point gain.
The index added 1 percent on Wednesday after the BOJ’s Deputy Governor Uchida Shinichi said the central bank will not raise rates when markets are in such a volatile state.