Japanese stocks fell in thin trading on Monday morning as the yen gained against the dollar, putting pressure on exporters after the Bank of Japan disappointed markets with minor adjustments to its massive stimulus programme.
The Nikkei share average fell 1.7 per cent to 18,673.72 during midmorning trading.
"Markets weren't impressed by the BOJ's actions on Friday and currently that alone is enough to see the index capitulate," said Martin King, co-managing director at Tyton Capital Advisors.
"I don't think we are going to see 18,565 breached this year but a macro environment of socio-political unrest, terror, commodity price volatility and central bank intervention will have many investors exercising caution as the exuberance of the past three years is nowhere to be seen."
On Friday, the BOJ announced it would maintain its massive stimulus while expanding the types of assets it purchases - a move some investors believe might delay expansion of the quantitative easing programme which has underpinned stocks.
Sentiment took a further hit as US crude oil prices dipped toward last week's 2015 lows after a rebound in drilling activity threatened to add to the current glut.
Major exporters suffered on the yen's extended gains against the dollar. Panasonic Corp shares fell 3.7 per cent in midmorning trading while Bridgestone Corp slipped 1.4 per cent and Toyota Motor Corp fell 2.3 per cent.
Toshiba Corp's shares tumbled as much as 10.4 per cent to its lowest in more than three years after weekend media reports said the company would soon announce record losses of around ¥500 billion ($4.13 billion) for the year ending in March.
Sharp Corp bucked the broader market, climbing 1.7 per cent after the Nikkei business daily reported that US buyout firm KKR & Co was among the private equity firms interested in investing in the Japanese firm.
The broader Topix fell 1.5 per cent to 1,514.62 with all of its 33 subindexes sitting in negative territory.
The JPX-Nikkei Index 400 slipped 1.4 per cent to 13,637.41.