Tokyo shares fell sharply on Wednesday following a selloff overnight in New York. The drop came after weaker-than-expected US manufacturing data raised concerns about the American economy.
The benchmark Nikkei 225 ended the day at 37,047, down 4.2 percent. It briefly lost more than 1,800 points.
Investors unloaded shares across the board. Semiconductor firms and auto-industry companies were hit particularly hard.
Analysts say investors are worried that the US employment situation and corporate earnings may worsen, leading to a prolonged bumpy ride for stocks.