Tokyo stocks lost 1.37 percent by the close Monday, after Wall Street tumbled on weak US jobs data and the IMF warned over the state of the global economy while a strong yen also weighed.
The Nikkei 225 index at the Tokyo Stock Exchange gave up 123.87 points to 8,896.88 while the broader Topix index of all first-section issues was down 1.02 percent, or 7.90 points, to 763.93.
Friday's weaker-than-expected US jobs data and a strong yen were among the factors putting pressure on the Japanese market, dealers said.
Also weighing, official data showed that Japan's current account surplus, the broadest measure of trade with the rest of the world, plunged 62.6 percent in May from a year earlier.
Core machinery orders, meanwhile, came in weaker than expected, suggesting corporate Japan was investing less amid concerns about future demand.
Investors are now looking to European finance minister talks later in the day, and a Bank of Japan (BoJ) policy board meeting on Wednesday and Thursday, amid speculation over further easing.
"We're nowhere near a crisis point for stocks," said CLSA equity strategist Nicholas Smith.
"But the pressure is on the BOJ to act, especially now that the politicians have done their part in taking steps to shore up the country's balance sheet with the recent sales tax hike," Smith said.
Japan recently passed a bill through its lower house of parliament to double consumption taxes to 10 percent by 2015 to help chop a massive national debt.
In Tokyo trade, bank stocks were under pressure with Mizuho Financial down 1.50 percent at 131 yen, while firms that ship to hard-hit Europe were also weaker with automaker Mazda falling 3.84 percent to 100 yen and chipmaker Renesas Electronics off 4.25 percent to 315 yen.
The Dow Jones Industrial Average lost 0.96 percent to 12,772.47 on Friday, while the S&P 500 gave up 0.94 percent and the tech-rich Nasdaq dropped 1.30 percent.
The tumble came as the US Labor Department said the economy generated only a net 80,000 new jobs in June, leaving the unemployment rate at 8.2 percent in a bad sign for US growth and consumer spending.
The news came on the heels of International Monetary Fund chief Christine Lagarde saying that the fund would be cutting its global growth forecasts.
On currency markets, the euro was changing hands at $1.2286 in Tokyo trade against $1.2287 in New York late Friday.
The euro bought 97.92 yen from 97.83 yen, while the dollar fetched 79.69 yen, little changed from 79.62 yen in New York.
-- Dow Jones Newswires contributed to this report --
