Tokyo stocks fell 0.74 percent on Friday morning as sentiment soured on worries about the US economy and the yen's surge against the euro, driven by widespread fears over Europe's fiscal woes.
The Nikkei 225 index at the Tokyo Stock Exchange lost 63.61 points to 8,479.12 while the broader Topix index of all first-section issues fell 0.95 percent, or 6.81 points, to 712.68.
Wall Street finished lower on Thursday, with the Dow Jones Industrial Average giving up 0.21 percent to finish at 12,393.45.
"A full-fledged rebound in the equities market is unlikely, since the global economy is likely to remain sluggish, given lingering eurozone debt problems," said Mizuho Securities senior technical analyst Yutaka Miura.
A 3.3 percent rise in Japanese corporate capital spending in the January to March quarter did little to boost the local market. It came a day after Japan reported anaemic on-month factory output growth of 0.2 percent in April.
"Given the deterioration in the US economic indicators, a cautious stance is likely to be intensified ahead of key data releases (later Friday), which are the US non-farm payrolls figures and ISM manufacturing report," Monex chief strategist Takashi Hiroki told Dow Jones Newswires.
Exporters were lower on the strong yen, which makes their products more expensive in overseas markets, with Canon off 2.53 percent to 3,070 yen and Sony down 2.76 percent at 1,021 yen.
Mazda tumbled 4.0 percent to 96 yen following a report in the Nikkei business daily that it plans to cut 250 sales jobs at its US and European operations due to weakening demand.
The euro tumbled overnight amid fears that debt-riddled Greece may leave the eurozone and Spain's banking troubles could require an international rescue.
The euro was changing hands at 96.83 yen in Tokyo midday trade Friday after falling to 96.51 yen in New York, the lowest level since December 2000.
The common currency bought $1.2340 against $1.2361 in New York late Thursday, while the dollar was at 78.47 yen against 78.33 yen.