TOKYO: Tokyo stocks closed more than two percent lower on Monday over fears of the spread of the Omicron coronavirus variant in Europe and the US.

The benchmark Nikkei 225 index dropped 2.13 percent, or 607.87 points, to end at 27,937.81, while the broader Topix index fell 2.17 percent, or 43.14 points, to 1,941.33.

"A sense of caution over the spread of Omicron in Europe and the US remains strong," senior strategist Yoshihiro Ito of Okasan Online Securities said.

The Nikkei index was also weighed down by the lockdown in the Netherlands and an interest rate cut by China's central bank, he added.

Toyota dropped 2.44 percent to 2,051 yen after reports said it will further curb the output of its domestic plants due to a supply chain crunch in Southeast Asia.

Honda tumbled 3.65 percent to 3,086 yen, as media reported that it will cut output in one domestic plant by a further 10 percent due to a parts shortage.

Eisai fell 1.40 percent to 6,876 yen after a key panel of the European Union's drugs regulator reportedly gave a negative assessment of an Alzheimer's treatment developed by the company's partner Biogen, dimming hopes for marketing the drug in Europe.

Uniqlo operator Fast Retailing lost 2.20 percent to 66,560 yen while SoftBank Group sank 2.49 percent to 5,344 yen.

The dollar fetched 113.47 yen in Asian trade, against 113.72 yen in New York late Friday.

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