Investors in Tokyo rushed to sell off shares on Tuesday following the collapse of two US banks.
The Nikkei Stock Average ended the day at 27,222, down 610 points or 2.19 percent, from Monday's close. The benchmark briefly lost more than 700 points.
Investors unloaded shares across the board. Bank, insurance and other financial stocks saw especially sharp declines.
The Nikkei 225 tumbled for a second day after the bank failures.
Some investors turned cautious, moving into safer assets such as gold and government bonds.
The yen has also strengthened against the dollar, sending auto and other export-related shares lower.