Japan's Nikkei index lost 2.17 per cent in early trade Friday after shares on Wall Street and in Europe plunged on deepening worries about the global economy dipping into another recession.
The headline index at the Tokyo Stock Exchange had dropped 193.74 points to 8,750.02 about one hour after opening.
The Topix index of all first section shares fell 1.76 per cent or 13.52 points to 753.79.
Banking and financial shares faced selling pressure after European and US stocks fell sharply on weak US economic data and renewed concerns about the eurozone debt crisis, analysts said.
The Dow Jones Industrial Average closed down 3.68 per cent following an earlier rout on Europe's bourses.
The broader S&P 500 sank 4.46 per cent, while the tech-heavy Nasdaq Composite tumbled 5.22 per cent.
A firm yen, standing at 76.84 to the dollar in morning trade from 76.52 overnight in New York, also weighed on exporters, said Hiroichi Nishi, general manager at SMBC Nikko Securities.
"Concerns about a slowdown in the US and global economies, the European debt problems and the stronger yen are all going to weigh on the market," he told Dow Jones Newswires.
The feared global slowdown and a high yen could stall the growth of the world's number three economy and pull down the Tokyo bourse, analysts said.
"The deterioration in the global economy will shatter expectations for Japan's V-shaped recovery," said Yutaka Shiraki, a senior equity strategist at Mitsubishi UFJ Morgan Stanley Securities.
The euro stood at $1.4316 and 110.00 yen, from $1.4337 and 109.70 yen in New York.