Tokyo stocks fell to three-month lows Monday. Selling of heavyweight banking and Internet-related shares after declines in U.S. stocks Friday sparked a selloff in a wide range of issues.
Foreign investors unloaded shares ahead of November book-closings, leading to stop-loss selling by individual investors and further dampening investor sentiment, brokers said.
The 225-issue Nikkei average lost 380.23 points, or 3.74 percent, to close at 9,786.83, falling below the 10,000 mark for the first time since Aug. 18 and closing at the lowest level since Aug. 13.
The Topix index of all first section issues on the Tokyo Stock Exchange shed 34.88 points, or 3.46 percent, to 971.89, the lowest close since Aug. 15.
"Selling prompted more selling and caused a vicious cycle," said Masatoshi Sato, senior strategist at Mizuho Investors Securities Co.
Concerns over geopolitical risks also dampened investor sentiment, brokers said.
"Reports of possible terrorist attacks on Japan have fueled anxiety among investors," said Norihiro Fujito, a senior investment strategist at Mitsubishi Securities Co.
According to media reports, a group believed to be associated with the al-Qaeda terrorist network sent an e-mail warning of an attack in Tokyo to an Arabic-language daily in London over the weekend.
Selling of Softbank Corp., a popular stock among individual investors, also cooled investor sentiment. The Internet investor was the most heavily traded issue by value, down by its daily limit of 500 yen to 3,500 yen.
