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Tokyo - Tokyo shares dived on Wednesday morning as fresh worries about Britain's vote to leave the European Union (EU) sent the yen soaring, denting exporters including Toyota and rival automaker Honda.
The benchmark Nikkei 225 index tumbled more than three percent before finishing the morning down 463.03 points, at 15 206.30.
The Topix index of first-section shares was down 35.78 points, at 1 220.86 by lunch.
Tokyo's selloff was sparked by a sharp rally in the yen as investors flocked to the unit which is seen as a safe bet in times of turmoil.
A stronger yen is bad for Japanese exporters' profitability, however, and hurts demand for their shares.
In Tokyo, the dollar slumped to ¥100.75 from ¥101.75 in New York late on Tuesday and its lowest since a day after Britain voted on June 23 to give up its EU membership.
The drop came on the back of warnings from the Bank of England Tuesday over the possible damage to global growth.
In its biannual report the BoE highlighted a number of risks emanating from the vote to leave the EU, including a hit to the commercial real estate market from the possible relocation of banking jobs to other European cities.
"The UK's economic outlook is blurred with uncertainty," Mitsuo Shimizu, deputy general manager with Japan Asia Securities Group.
"The pound's recent weakness is likely to encourage speculative buying in the yen," he told Bloomberg News.
Adding to the sense of panic was news that three commercial property funds worth billions of dollars had suspended trade and blocked client redemptions.
The moves come as fears grow that the vote will lead companies - particularly banks in London - to shift operations from Britain.
Brexit could have significant consequences for more than 1 000 Japanese firms that operate in the UK - many of which see it as a staging point for dealing in Europe.
In another sign of the flight to safety, the yield on Japanese 20-year government bonds touched zero for the first time, while other maturities also fell to new lows.
The drop underscored that investors were willing to sacrifice earnings to keep their money in rock-solid government debt.
Japanese bank shares were hammered after a warning from the European Central Bank that Italy's number-three Banca Monte dei Paschi di Siena, the world's oldest lender, had dangerously high levels of bad debt, hitting already shaky sentiment.
Mitsubishi UFJ Financial Group plunged 4.15% to ¥431.3 by the break, while Sumitomo Mitsui Financial Group fell 2.68% to ¥2 810.0.
Automakers were also among the losers, with Honda nosediving 5.90% to ¥2 430.5 and Toyota plunging 3.08% to ¥4 994.
Uniqlo operator Fast Retailing, a market heavyweight, dived 4.06% to ¥25 460.
Sinking oil prices hit some crude-linked shares with refiner JX Holdings down 4.44% at ¥380.3.
