Tokyo stocks dived more than five percent on Friday morning as a strong yen battered exporters, with the market tracking a worldwide sell-off fuelled by worries about the global economy.
The benchmark Nikkei 225 index at the Tokyo Stock Exchange plunged 5.34 percent, or 838.74 points, to 14,874.65 at the lunch break, after a one-day trading holiday on Thursday.
The broader Topix index of all first-section shares declined 5.55 percent, or 70.25 points, to 1,194.71, putting it on track for its biggest weekly loss since 2008 at the height of the global financial crisis.
On Wednesday, the Nikkei closed at 15,713.39, its lowest finish since October 2014, before the Bank of Japan unleashed a second wave of stimulus by expanding its enormous asset-buying scheme, setting off a big stock rally.
"We've entered a different phase in the market," Juichi Wako, a senior strategist at Nomura Holdings, told Bloomberg News.
"We're not simply in a risk-off mode, the market's fallen to the point of pricing in a recession in the US.
"The market is saying we're worried no matter what (Federal Reserve Chair
Janet) Yellen says and their reaction shows there can be no real relief until we can truly see what's happening in the US economy."
A fierce sell-off gripped world markets Thursday after Yellen warned over the global economy.
The Fed boss said global market turmoil and tighter financial conditions posed risks to the US economy, and she pointed to "uncertainty" on China's yuan policy as a key cause of that turmoil.
Her less-than-optimistic assessment sparked more yen buying as traders flocked to a currency seen as a safe in times of turmoil.
- 'Appropriate measures' -
A stronger yen is bad for Japanese share markets, however, as it hurts the profitability of the country's exporters.
In currency trading, the dollar slipped to 112.23 yen from 112.39 yen in New York, where it tumbled below 111 yen at one stage.
The dollar was above 114 yen before the public holiday in Japan.
The wild volatility since Friday has prompted Japanese officials to say they would take "appropriate measures", sparking speculation that the central bank may intervene in currency markets for the first time since 2011 to stop the yen's rise.
"The verbal intervention has already started, with MoF (Ministry of
Finance) officials talking about moves being rough, which looks like the new code word for undesired strength," said Ray Attrill, co-head of currency strategy at National Australia Bank.
It added that "110 yen might be some line in the sand when the MoF will lean on the BoJ to shore things up."
In Tokyo share trading, Toyota tumbled 6.46 percent to 5,731 yen, while Subaru maker Fuji Heavy Industries plummeted 10.40 percent to 3,420 yen.
Mobile carrier SoftBank fell 7.66 percent to 4,250 yen and Sony was down 5.36 percent at 2,215.5 yen.
Financials also took a hit with major brokerage Nomura diving 8.25 percent to 451.3 yen, while banking giant Mitsubishi UFJ slipped 1.42 percent to 449.9 yen.
Energy explorer Inpex declined 5.01 percent to 891.3 yen. JX Holdings fell 4.19 percent to 424.6 yen. (AFP)