Tokyo stocks down 1.71pc by noon

The benchmark Nikkei 225 index at the Tokyo Stock Exchange fell 152.85 points to 8,797.89. The Topix index of all first-section issues sank 12.57 points or 1.63 percent to 757.21.

Renewed fears of a global slowdown gripped sentiment, dealers said.

US stocks plunged Friday on the weak payrolls data while the euro tumbled against the safe-haven yen after talks between Greece and international inspectors were suspended Friday.

The euro was trading at 108.78 yen in Tokyo morning trade, down from 109.72 yen in New York late Friday, dealing a blow to Japanese exporters dependent on the European market.

Sony fell 3.32 percent to 1,571 and Honda Motor went down 3.58 percent to 2,417 on a weaker euro.

"The US data was negative, but investors are more focused on developments in Europe with Greece becoming a destabilising factor," Hideyuki Ishiguro, strategist at Okasan Securities, told Dow Jones Newswires.

The European Union and International Monetary Fund left a critical audit of Greek finances unfinished on Friday saying more budget work was needed, and Athens admitted its deficit target is in trouble.

Ishiguro added Japanese shares were aided by relatively high support ratings for the new prime minister, Yoshihiko Noda, who was sworn in on Friday as the nation's sixth new leader in five years.

Opinion polls showed over the weekend that his cabinet won solid public backing, with approval ratings topping 60 percent.

Shares of insurer Tokio Marine Holdings fell 3.32 percent to 1,975 after a typhoon wreaked havoc in western Japan.

Houses, cars and other insurable assets were hard-hit as floodwaters triggered landslides that swept buildings away, killing at least 25 people.

In New York the Dow Jones Industrial Average ended down 2.20 percent at 11,240.26 after the highly awaited US non-farm payrolls report revealed that the US economy created no jobs in August.

Financial stocks also took a severe pounding after reports that US authorities would sue more than a dozen big banks over their peddling of mortgage-backed securities prior to the 2008 financial crisis.

The pending suit was announced after the market's close.

Nomura Holdings tumbled 4.64 percent to 308 yen Monday morning. The Japanese brokerage house's US unit is one of 17 financial institutions being sued over soured mortgage bonds in order to recoup heavy losses from failed investments.

Copyright AFP (Agence France-Presse), 2011