Japan's Nikkei share average slid to its lowest close since April 2009 on Monday as it caught up with Wall Street losses after a three-day weekend, falling in line with other risk assets on worries about a Greek debt default.
Trading companies bore the brunt of the sell-off after crude oil futures fell to a six-week low on Friday and prices of copper and some other key base metals skidded on concerns about global growth.
Fears of a Greek default were investors' main focus, as bankers at conference on the sidelines of the International Monetary Fund/World Bank sessions in Washington braced for a worst-case scenario and hoped that Europe can prevent the impact from spreading to other euro-zone countries.
German Deputy Finance Minister Joerg Asmussen said on Sunday in Washington that Greece will probably have to wait beyond a key meeting early next month for a decision on an urgently needed bailout payment from its European partners and the IMF.
The Nikkei lost 2.2 percent to 8,374.13, its lowest close since 8,351.91 hit on April 1, 2009.
The broader Topix index slid 2.1 percent to 728.85.
The Nikkei broke below support at its Sept. 14 low of 8,499.34, which had been its lowest intraday level since March 15's 8,227.63 hit in the wake of the March 11 earthquake. At one point, it fell as low as 8,359.70.
"Depending on how the Greek situation progresses, the Nikkei could fall below the March 15 low in the first 10 days of October," said Takashi Ushio, head of the investment strategy division at Marusan Securities Co.
Other risk assets were hit, while emerging economy currencies, like the Korean won , suffered substantial losses. The euro also dropped sharply on Monday, hitting a fresh 10-year low against its Japanese counterpart.
U.S., EUROPEAN STOCKS
The Nikkei is trading well below its 25-day moving average of 8,733, suggesting it could be oversold.
The market got some support from dividend-related buying. Tuesday is the last day for investors to buy many Japanese stocks and still get dividends on them for the April-September half year.
With discussion about Greece's debt situation likely to drag on for at least a few more weeks, short-term market rebounds are possible, making investors cautious about testing the downside too far.
"It's possible that U.S. and European stocks could stage a rebound later this week, which will prevent investors from pushing the downside. It's difficult to sell too far in such a market," said Yutaka Miura, senior technical analyst at Mizuho Securities.
Wall Street managed such a rebound on Friday, though it still suffered steep weekly losses that pushed down the S&P 500 index 6.6 percent for the week.
Among trading companies, Mitsui & Co Ltd tumbled 5.9 percent to 1,172 yen and Mitsubishi Corp, the second-heaviest traded share by turnover, lost 7.9 percent to 1,565 yen.
Fanuc Corp lost 3.6 percent to 10,440 yen, as investors feared that a slowdown in global growth would hit business spending and erode demand for the industrial robot maker's products.
Nippon Electric Glass, which makes glass used in LCDs, plunged 12.3 percent to 656 yen after the company gave a weak profit forecast for the April-September first half, citing an ongoing slump in flat-panel sales.
KDDI Corp, whose shares rose more than 20 percent since mid-August on speculation it would be selling the iPhone, did not comment about the iPhone on Monday at an event to showcase its new products. Its shares lost 8 percent to 574,000 yen.
KDDI is hammering out a deal with Apple, a source familiar with the matter said on Thursday, which would end Softbank Corp's reign as Apple's sole iPhone vendor in Japan.
Softbank, the heaviest-traded share by turnover, sank 5 percent to 2,167 yen, after it lost 12 percent on Thursday.
Volume was heavier than in recent sessions, with 2.1 billion shares changing hands on the Tokyo Stock Exchange's main board. That surpassed the average daily volume of the five previous trading sessions of 1.63 billion shares.
Decliners overwhelmed advancers by 1,381 to 228.