Tokyo - Tokyo stocks plunged on Friday morning, with the benchmark Nikkei 225 index falling three percent on revived trade war fears as US President Donald Trump unveiled tariffs on Chinese imports.
Investors were also cautious after Trump sacked his national security advisor, replacing him with hawkish former UN ambassador John Bolton.
The Nikkei was down 764.07 points to 20 827.92 by the lunch break, while the broader Topix index dropped 48.73 points, to 1 678.66.
The dollar dropped to ¥104.80, dipping below the 105-mark for the first time since November 2016, as investors were seen taking refuge in the safe haven Japanese currency.
A strong yen weighs on the bottom lines of Japanese exporters, a key growth engine of the Japanese economy.
"Given all the factors in the market, I think you have to expect a fall of this magnitude," said Makoto Sengoku, market analyst at Tokai Tokyo Research Institute.
"The Trump administration's tariffs against China. Mr. McMaster leaving. There is a sense of caution towards the administration," he told AFP.
"People are worried about a possible trade war. Those are factors behind Japanese stocks today. The dollar has breached below ¥105. That's also a factor driving down Tokyo shares," he said.
Trump on Thursday unveiled tariffs of up to $60bn on Chinese imports, reviving fears of a trade war.
The drop in Tokyo trade follows steep falls in global stocks, with the Dow Jones Industrial Average closing down 2.9%.
Among major shares, Nippon Steel & Sumitomo Metal Corp dropped 3.43% to ¥2 278.5 during the morning session. Construction equipment maker Komatsu plunged 6.02% to ¥3 483.
Toyota lost 2.60% to ¥6 668. Honda gave up 4.04% to ¥3 516.
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