Japan's benchmark Nikkei 225 Stock Average lost more than 3 per cent Friday after Wall Street plunged overnight and the yen advanced against the US dollar, dpa reported.
The Nikkei index dropped 228.54 points, or 3.07 per cent, to 7,204.95 after it gained nearly 2 per cent the previous day on hopes in China's expected economic stimulus measures.
The broader Topix index of all first section issues was also down 16.45 points, or 2.22 per cent, to 725.1.
Exporters were also hurt in Friday morning trading as the stronger yen shaved off earnings of Japanese firms.
On currency markets at 9 am (0000 GMT), the dollar traded at 98.13-18 yen, down from Thursday's 5 pm quote of 99.60-62 yen.
The euro traded at 1.2543-48 dollars, down from late Thursday's quote of 1.2610-12 dollars, and at 123.10-15 yen, down from 125.60-64 yen.