Japanese shares fall over 2% on Wall Street losses, stronger yen

Japanese shares fell more than 2% on Tuesday, tracking Wall Street's sharp losses overnight on growing fears that the U.S. economy would fall into recession, while a stronger yen also weighed on exporters.

The Nikkei index was down 2.2% at 36,219.68, as of 0153 GMT, after falling below 36,000 level to touch its lowest since September 17. The broader Topix fell 2.5% to 2,633.86, hitting its lowest since October 28.

U.S. stocks plunged on Monday as relentless tariff wrangling and mounting anxieties from a possible federal government shutdown gave rise to fears that the U.S. economy could be careening into recession.


"The Topix had been performing better relative to the Nikkei, but it was hit hard as well today as value shares fell," said Seiichi Suzuki, chief equity market analyst at Tokai Tokyo Research Institute.

Banks, a symbol of value shares and which had been rising amid expectations of aggressive Bank of Japan rate hikes, slipped on Tuesday.

Mitsubishi UFJ Financial Group and Sumitomo Financial Group fell more than 3% each. Mizuho Financial Group lost 5.8%.

The yen rose to its highest in nearly five months as fears about a tariff-driven slowdown in U.S. growth rattled the dollar.

A stronger Japanese currency tends to hurt exporter shares, as it decreases the value of overseas profits in yen terms when firms repatriate them to Japan.

Toyota Motor fell 3.7% to drag the Topix the most. Game maker Sony Group lost 3.9%.

Among chip-related stocks, Advantest and Tokyo Electron slipped 3.88% and 2.82%, respectively. Technology investor SoftBank Group fell 3.8%.

Air-conditioner maker Daikin Industries rose 0.85% to provide the biggest support to the Nikkei.

All of the Tokyo Stock Exchange's 33 industry sub-indexes fell, with the nonferrous metals sector falling 4.8% to become the worst performer.

Cable makers Fujikura and Furukawa Electric , a gauge for data centre investments, lost 6% and 8%, respectively.