The Nikkei 225 fell as much as 7.1% in early trade, pushing its losses to 21% since early July. The index is poised to enter bear market territory, which is defined as a 20% pullback from recent highs. It later pared its losses to 5.8%.
On Friday, the index closed down 5.8%, marking its biggest daily drop since March 2020, as traders fretted about the impact of a stronger yen on Japanese companies after the Bank of Japan signalled further rate hikes could be on the way.