Japanese shares sank on Monday, tracking Wall Street's sharp retreat after several US states imposed business restrictions to tackle a resurgence in new coronavirus cases.
The benchmark Nikkei average tumbled 2.3% to 21,995.04 points, its lowest close since June 15, with cyclical stocks leading the decliners.
The Nikkei also fell below a major support level of its 25-day moving average, which was last at 22,356, for the first time since April 7.
Wall Street's major indexes plunged on Friday as some US states reconsidered their reopening plans after the early lifting of restrictions was followed by a resurgence in new infections.
Further denting investor sentiment, the Wall Street Journal reported that the Phase 1 US-China trade deal could be at risk.
"Even though equity prices (in Japan) have risen significantly from the lows in March, we believe that a great deal of risk aversion still exists for many (foreign) investors," said Bill Maldonado, global chief investment officer for equities at HSBC Global Asset Management.
The broader Topix lost 1.8% to 1,549.22, also a two-week low, with all of the 33 sector sub-indexes on the Tokyo exchange finishing lower.
Highly cyclical iron and steel, mining and air transport indexes were among the worst-performers on the main bourse.
Tokyo-listed banks tracked US counterparts lower, with Mitsubishi UFJ Financial Group (MUFG) and Sumitomo Mitsui Financial Group (SMFG) falling 2.3% and 2.0%, respectively.
Elsewhere, shares of the Nikkei's heavyweight SoftBank Group shed 2.8%.
The tech conglomerate said it expects a gain of around 600 billion yen ($5.6 billion) in the April-June quarter on the sale of
T-Mobile shares, but a derivative liability from call options received by T-Mobile's top shareholder, Deutsche Telekom, is not included in that figure.
Japan's retail sales in May fell 12.3% on year as coronavirus curbs continued to depress spending, data showed on Monday, but the bearish figures were not a focus for traders.
($1 = 107.1800 yen)