Tokyo's benchmark Nikkei index lost more than one percent Wednesday on slumping US high-tech shares and fears of a coronavirus vaccine delay after a trial was paused temporarily.
The Nikkei 225 was down 1.04 per cent, or 241.59 points, to close at 23,032.54 while the broader Topix index fell 0.96 per cent, or 15.49 points, to 1,605.40.
"Investors are disheartened by sharp falls in US shares, with high-techs leading losses," Yoshihiro Ito, chief strategist at Okasan Online Securities, said in a commentary.
On Tuesday, Wall Street stocks finished sharply lower, with the tech-rich Nasdaq suffering another drubbing in a broadening sell-off.
"Among high-tech shares, chip-linked stocks were hit hard by the Nasdaq slump," Daiwa Securities chief technical analyst Eiji Kinouchi told AFP.
Before the opening bell in Tokyo, AstraZeneca, a frontrunner in the global race for a Covid-19 vaccine, said it had paused a clinical trial of its candidate in what it called a routine action after a volunteer developed an unexplained illness.
"The news also dampened market sentiment in Japan, which is heavily counting on vaccines for hosting the Olympics," Kinouchi said.
Markets worldwide have been closely tracking efforts to develop a vaccine, with the hope a successful formula will speed up the global economic recovery.
Analysts also said investors were watching policy debates among three candidates for Japan's next prime minister to get fresh cues for trade.
The dollar fetched 105.90 yen in Asian afternoon trade, against 106.00 yen in New York late Tuesday.
In Tokyo, SoftBank Group, which has heavily invested in US high-tech shares, lost 2.87 per cent to 5,677 yen, dipping for the fifth straight day.
Chip-making equipment manufacturer Tokyo Electron dropped 2.05 per cent to 26,025 yen as Advantest, creator of semiconductor testing equipment, plunged 2.54 per cent to 4,980 yen.
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