TOKYO: Tokyo stocks plunged more than five percent Tuesday as investors took their lead from a sell-off on Wall Street, while a surging yen hit exporters.
The benchmark Nikkei 225 index dived 5.26 percent, or 1,194.21 points, to end the early session at 21,487.87, while the broader Topix index slumped 4.99 percent, or 90.98 points, to 1,732.76.
The losses are the biggest for the Nikkei since a similar collapse on November 9, 2016 in response to the election of Donald Trump as US president.
"Investors fled to sell after the large drops on Friday and Monday" on Wall Street, said Toshihiko Matsuno, analyst at SMBC Nikko Securities.
"The gains since the turn of the year were rapid and the sudden downturn came as a shock," he told AFP.
World markets had enjoyed a stellar rally in recent months -- with the Nikkei hitting a 26-year high in January -- thanks to a healthy global economy and robust corporate earnings.
But selling kicked in last week after another strong US jobs report heightened expectations the Federal Reserve will quicken its pace of interest rate hikes, as the era of easy money draws to an end.
Friday's jobs reading also came as US benchmark 10-year Treasury bill yields sit at four-year highs, adding to jitters among investors worried about high borrowing costs.
And on Wall Street Monday the Dow suffered its biggest ever one-day points drop to wipe out its 2018 gains.
Markets are now entering "a correction phase", Matsuno added. "It's natural that we see a correction, though the pace is a bit too fast."
Japanese exporters were also hit by the stronger yen, which draws safe-haven buying in times of uncertainty.
The dollar fell to 108.67 yen from 109.13 yen in New York and was well down from the levels around 110 yen seen earlier Monday in Asia.
A strong yen hits Japanese exporters as it makes their products less competitive abroad and erodes profits when repatriated.
Toyota, which is to announce earnings later Tuesday, sank 3.46 percent to 7,241 yen while Canon fell 3.25 percent to 4,108 yen.
Sony tumbled 4.77 percent to 5,302 yen and Nintendo plunged 6.11 percent to 44,040 yen.
But Mitsubishi Motors rose 0.48 percent to 822 yen after posting strong earnings after the market close on Monday.
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