Tokyo stocks fell more than one percent in early trade on Wednesday, following an overnight drop in Europe and on Wall Street amid eurozone debt concerns and soft US corporate earnings.
The Nikkei 225 index at the Tokyo Stock Exchange opened down 0.91 percent and expanded the loss to 1.46 percent, losing 124.29 points to 8,363.80, in the first 30 minutes of trading.
It was the first time the benchmark index fell below the 8,400 mark since June 5.
US stocks fell sharply Tuesday on growing concerns over Europe's sovereign debt crisis, soft corporate earnings at home and a weak manufacturing report.
The Dow Jones Industrial Average closed with triple-digit losses for the third straight day, down 104.14 points or 0.82 percent at 12,617.32.
Stocks related to Apple may come under pressure in Tokyo. The tech giant reported a rise in its quarterly profit to $8.8 billion on hot iPad sales but the results came up short of lofty Wall Street expectations, brokers said.
Shortly before the market opened Japan posted a first-half record trade deficit of $37.3 billion despite a surprise surplus in June.
Still, Tachibana Securities market analyst Kenichi Hirano in Tokyo said that "a large sell-off may not follow," while some bargain-buying may support the Nikkei.
The euro sank deeper overnight, touching fresh two-year lows against the dollar and near 12-year lows against the yen as Spain appeared to inch closer to a bailout.
The euro fetched $1.2059 and 94.21 yen in early Asian trade, compared with $1.2063 and 94.28 in New York late Tuesday.
The dollar was at 78.10 yen against 78.17 Japanese yen.