Japan's Nikkei average fell more than 3 percent on Monday as investors, spooked by debt woes in Hungary and the euro's fall to a more than eight-year low against the yen, sold shares across the board.
Exporters such as Canon Inc were hit particularly hard, while Mitsui & Co and other trading houses slid after metals prices fell on Friday, with disappointing U.S. jobs data adding to doubts about the global economy.
Worries that Europe's sovereign debt troubles could spread reignited after a Hungarian official said the country was at risk of a Greek-style crisis, sending the euro tumbling
"There's a real sense of investors taking their money out of risky assets, as is seen by the fall in commodities as well," said Nagayuki Yamagishi, a strategist at Mitsubishi UFJ Morgan Stanley Securities.
"The euro zone worries seem set to be with us for a while."
The benchmark Nikkei slid 3.4 percent to 9,563.26, heading back towards a six-month low of 9,395.29 hit on May 27. The broader Topix shed 3 percent to 863.52.
The euro fell as low as 108.20 on electronic trading platform EBS, an 8-½ year low.
Many Japanese exporters have set their currency assumption rates for euro/yen at 120-125 yen for the year to March, and investors fret about a stronger yen as it eats into exporters' profits when repatriated.
Market players said that while the disappointing U.S. jobs data contributed to the downward pressure, it was having less of an impact than the euro's tumble.
Data showed the U.S. economy added 432,000 jobs last month, far fewer than the expected 513,000, with a large portion of those being temporary hirings for the U.S. census.
"I think it's still far too early to say that the U.S. economy is off the recovery track because of these jobs figures," said Noritsugu Hirakawa, a strategist at Okasan Securities.
"Basically, the market rose last week on a lot of expectations, and a number of these have now been upturned. The Hungary situation is new, and investors want to wait and see."
The Nikkei's relative strength index (RSI) fell to 35, with everything from 30 and below considered oversold. Its MACD, which had headed upwards after a bullish cross last week, appeared poised to dip again.
