Tokyo's key Nikkei index plunged more than two percent on Friday, hit by a surge in the yen and sell-offs on Wall Street amid worries over the US economy.
In its first trading session of 2019, the benchmark Nikkei 225 lost 2.26 percent or 452.81 points to close at 19,561.96 as it was catching up with other markets after the New Year's break.
The broader Topix index lost 1.53 percent or 22.93 points to 1,471.16.
Since the last session in Tokyo on December 28, heavy selling has hit global markets.
"Players were trying to catch up with the downward trend following long New Year holidays," Shinichi Yamamoto, broker at Okasan Securities, told AFP.
On Wall Street on Thursday, stocks plunged as China's slowing economy forced Apple to slash its revenue forecast.
Sentiment in the United States was further dented by Institute for Supply Management data showing US manufacturing activity at a two-year low.
The weak data was "more proof, if needed, that President (Donald) Trump's trade actions against China are now hurting the US as much as they are China," said Ray Attrill, head of foreign exchange strategy and markets at National Australia Bank.
It is "more reason to think a Sino-US trade deal is in the offing in coming weeks," he said in a note.
Seiichi Suzuki, senior market analyst at Tokai Tokyo Research Centre, said the strong yen dampened sentiment greatly as it clouds the outlook of Japanese exporters.
The dollar was trading at 108.21 yen, up from New York Thursday afternoon but still considerably lower than the 110-yen range seen when the Tokyo market closed for the last year.