TOKYO: Tokyo stocks lost 1.80 percent Thursday to close at their lowest since March 2009, after weak demand for a German government debt auction stoked fears over Europe's fiscal crisis and eurozone growth prospects.
With the yen gaining against the embattled euro, the Nikkei 225 index at the Tokyo Stock Exchange lost 149.56 points to 8,165.18, near the day's low of 8,157.39.
It was the lowest close since March 31, 2009, when the headline index ended at 8,109.53.
The Topix index of all first-section issues was down 1.63 percent, or 11.71 points, at 706.08.
Japanese shares played catch-up with the region's sharp losses Wednesday, when the Tokyo market was closed for a national holiday. Trading volume was low ahead of the US Thanksgiving holiday.
"There was a substantial collapse (in) the euro after the German auction, and it looks like the global economy is going down while the core of Europe is also facing problems," said Thomas Harr, head of Asian FX strategy at Standard Chartered in Singapore.
The euro slid against the yen in Asian trade, buying 103.06 yen compared to 103.15 yen in New York late Wednesday.
The single currency recovered sightly against the greenback to $1.3358 from $1.3347 in New York, after plunging from $1.3507 Wednesday.
The dollar was at 77.16 yen, down from 77.29.
Germany sold only 3.9 billion euros ($5.2 billion) worth of its benchmark 10-year "Bund" out of the 6.0 billion euros on offer, reflecting "extraordinarily nervous market conditions", said a German government spokesman.
German bonds are considered the gold standard of eurozone debt and the poor debt sale struck at the heart of the bloc's fiscal credibility.
"It's OK as long as money is floating from bad assets to good ones, but now investment money itself is shrinking," Kenichi Hirano, operating officer at Tachibana Securities, told Dow Jones Newswires.
Scandal-hit Olympus rose 17.3 percent to 1,019 yen as its ousted chief Michael Woodford returned to Japan from Britain for meetings with investigators over a cover-up of the company's massive investment losses.
Nomura Holdings fell 5.49 percent to 224 yen in the wake of a Financial Times report that said the firm is stepping up its asset sale plans to shore up its capital buffers.
China-exposed Komatsu shed 4.06 percent to 1,818 yen and Fanuc lost 3.34 percent to 11,850 yen on weak China manufacturing data on Wednesday. Among other exporters, Canon fell 1.21 percent to 3,265.
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