Tokyo stocks fell 0.64 per cent on Wednesday after European and US markets tumbled overnight on uncertainty over the Greek debt swap and worries about the global economy.
The Nikkei 225 index at the Tokyo Stock Exchange lost 61.57 points to close at 9,576.06 after US shares closed with their biggest losses of the year Tuesday on rekindled jitters over Greece's fiscal situation.
The Topix index of all first-section issues dropped 0.56 per cent or 4.64 points to 822.71.
Brokers said Wednesday's decline was in line with a slump overseas and also due to ongoing profit-taking but investors' sentiment in Tokyo remained positive.
"With share valuations still relatively cheap, we can expect quite a bit of value-buying despite recent selloffs," Daiwa Securities head of investment strategy and research Kazuhiro Takahashi said.
Concerns that not enough of Greece's creditors would sign on to the country's crucial debt swap - essentially a 107 billion euro- ($A133 billion) writedown of Athens' bonds - brought new worries to the fragile eurozone and hit the euro on Tuesday.
The euro was trading at $1.3137 and 106.10 yen in Tokyo afternoon trade, up from $1.3113 and 106.06 yen in New York late Tuesday, after plunging overnight on worries over the Greek debt swap.
The dollar was at 80.75 yen against 80.92 in New York.
Exporters fell, with Toyota Motor down 1.21 per cent at 3,245 yen and Sony 2.38 per cent lower at 1,638 yen.
Financials were sharply off, with Nomura Holdings down 1.90 per cent at 361 yen.
Olympus shed 1.07 per cent to 1,286 yen after prosecutors charged the scandal-hit company and three former senior executives over a huge loss cover-up.
Following sharp falls in European markets the Dow Jones Industrial Average plunged 203.66 points or 1.57 per cent to end Tuesday at 12,759.15. It was the blue-chip Dow's first 200-point-plus loss since November 23.
Fresh data confirming the eurozone appears headed into recession, after shrinking by 0.3 per cent in the fourth quarter, also weighed on sentiment.
That came after China's dampened its growth outlook on Monday, and as Brazil reported a mere 0.3 per cent expansion in the fourth quarter.
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