Japan's Nikkei average fell almost three percent to close at a three-month low on Wednesday as investors unloaded blue-chip issues like Sony Corp on a strong yen and a four-day losing streak on Wall Street.
Poor earnings from Japan Telecom Holdings also dragged down other large-cap telecoms shares such as Nippon Telegraph and Telephone Corp (NTT) and NTT DoCoMo Inc, keeping the market under pressure.
Kazunori Ohtomo, senior fund manager at STB Asset Management, said blue-chip companies, mostly exporters, could remain weak with the yen having a slim chance of easing against the dollar by the end of this year.
"It will be tough for blue-chip firms," he said.
The Nikkei fell 2.85 percent to 9,614.60, its lowest close since August 12. The benchmark index has now shed about 44 percent of the gains it marked between April, when it hit two-decade troughs, and October.
The broader TOPIX index lost 2.08 percent to 953.19.
A slide in the dollar against the yen -- it floundered around 108 yen near a three-year low on Wednesday -- encouraged investors to unload technology shares with Sony falling 4.17 percent to 3,680 yen and NEC Corp dropping 6.66 percent to 785 yen.
Market sentiment was also aggravated by growing concerns about possible terror attacks after Japan's Foreign Ministry said there had been gunfire on a street near the Japanese embassy in Baghdad early on Tuesday.
On the back of such security concerns, investors sold non-life insurers with Millea Holdings down 4.84 percent at 1.18 million yen and Sompo Japan Insurance off 3.35 percent at 809 yen.
Keiko Kondo, senior strategist in the equity research department at UFJ Tsubasa Securities, said the market has not priced in the new risk factors and could briefly go lower this week.
"The market could overreact to these concerns," she said.
Japan Telecom, owned two-thirds by Britain's Vodafone Group Plc, dove by its daily limit of 15.02 percent to 283,000 yen, becoming the third-biggest percentage loser on the main board.
Japan Telecom said on Tuesday it fell deep into the red in the six months to September, due to losses on the sale of its fixed-line operations, and revised down its full-year net forecast to a loss from a profit.
Along with Japan Telecom, NTT, Japan's largest telecoms carrier, fell 2.52 percent to 503,000 yen while NTT DoCoMo, the Tokyo bourse's second-largest firm by capitalization, dropped 5.44 percent to 226,000 yen.
Selling also prevailed in the banking sector despite a report in the daily Nihon Keizai newspaper that the nation's major banking groups were likely to revise their earnings forecasts upward for the year to March thanks to the improving economy.
The market brushed off the report and sent Mizuho Financial Group down 3.13 percent to 217,000 yen. Sumitomo Mitsui Financial Group shed 5.36 percent to 459,000.
Trading volume came down a notch, with 1.04 billion shares changing hands on the first section, compared with 1.25 billion on Tuesday. Decliners outpaced gainers, 870 to 578.
Meanwhile, STB's Ohtomo said the market would also be keeping an eye on Japan's parliament after a special nine-day session was convened on Tuesday.
In particular, attention will focus on the debate over reforming the national pension system, which is creaking under the strains of a rapidly aging society and long-dormant economy.
Some lawmakers have suggested raising premiums and increasing the financial burden on taxpayers and companies, ideas that Ohtomo said have somewhat compounded the already bearish market sentiment.
Poor earnings from Japan Telecom Holdings also dragged down other large-cap telecoms shares such as Nippon Telegraph and Telephone Corp (NTT) and NTT DoCoMo Inc, keeping the market under pressure.
Kazunori Ohtomo, senior fund manager at STB Asset Management, said blue-chip companies, mostly exporters, could remain weak with the yen having a slim chance of easing against the dollar by the end of this year.
"It will be tough for blue-chip firms," he said.
The Nikkei fell 2.85 percent to 9,614.60, its lowest close since August 12. The benchmark index has now shed about 44 percent of the gains it marked between April, when it hit two-decade troughs, and October.
The broader TOPIX index lost 2.08 percent to 953.19.
A slide in the dollar against the yen -- it floundered around 108 yen near a three-year low on Wednesday -- encouraged investors to unload technology shares with Sony falling 4.17 percent to 3,680 yen and NEC Corp dropping 6.66 percent to 785 yen.
Market sentiment was also aggravated by growing concerns about possible terror attacks after Japan's Foreign Ministry said there had been gunfire on a street near the Japanese embassy in Baghdad early on Tuesday.
On the back of such security concerns, investors sold non-life insurers with Millea Holdings down 4.84 percent at 1.18 million yen and Sompo Japan Insurance off 3.35 percent at 809 yen.
Keiko Kondo, senior strategist in the equity research department at UFJ Tsubasa Securities, said the market has not priced in the new risk factors and could briefly go lower this week.
"The market could overreact to these concerns," she said.
Japan Telecom, owned two-thirds by Britain's Vodafone Group Plc, dove by its daily limit of 15.02 percent to 283,000 yen, becoming the third-biggest percentage loser on the main board.
Japan Telecom said on Tuesday it fell deep into the red in the six months to September, due to losses on the sale of its fixed-line operations, and revised down its full-year net forecast to a loss from a profit.
Along with Japan Telecom, NTT, Japan's largest telecoms carrier, fell 2.52 percent to 503,000 yen while NTT DoCoMo, the Tokyo bourse's second-largest firm by capitalization, dropped 5.44 percent to 226,000 yen.
Selling also prevailed in the banking sector despite a report in the daily Nihon Keizai newspaper that the nation's major banking groups were likely to revise their earnings forecasts upward for the year to March thanks to the improving economy.
The market brushed off the report and sent Mizuho Financial Group down 3.13 percent to 217,000 yen. Sumitomo Mitsui Financial Group shed 5.36 percent to 459,000.
Trading volume came down a notch, with 1.04 billion shares changing hands on the first section, compared with 1.25 billion on Tuesday. Decliners outpaced gainers, 870 to 578.
Meanwhile, STB's Ohtomo said the market would also be keeping an eye on Japan's parliament after a special nine-day session was convened on Tuesday.
In particular, attention will focus on the debate over reforming the national pension system, which is creaking under the strains of a rapidly aging society and long-dormant economy.
Some lawmakers have suggested raising premiums and increasing the financial burden on taxpayers and companies, ideas that Ohtomo said have somewhat compounded the already bearish market sentiment.
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