Tokyo stocks fell 0.94 percent by the break on Friday, following a tumble on Wall Street, as Japanese markets were hit by a still-strong yen as investors grow concerned about the US economy.
The benchmark Nikkei 225 index at the Tokyo Stock Exchange gave up 83.10 points to 8,754.05, while the broader Topix index of all first-section issues sank 0.79 percent, or 5.80 points, to 729.55.
Wall Street and European markets fell Thursday on jitters over slowing European growth and the so-called US fiscal cliff, a combination of spending cuts and tax hikes due to come into effect on January 1.
US President Barack Obama's re-election has raised the spectre of a continued deadlock in Washington on the issue that could ultimately reverse the country's recovery and send the world's largest economy back into recession.
"Fiscal cliff worries continue to linger. Obama's re-election is seen as a sign that the political standoff may continue without resolution for the time being," said Yoshihiro Okumura, general manager at Chibagin Asset Management.
"US stocks most likely have room to fall further," he told Dow Jones Newswires.
On Wall Street the Dow fell 0.94 percent, a second day of losses after Obama's victory.
The Tokyo market was taking a "reflexive beating" after Wall Street's tumble with all eyes on Obama's announcement of his plan to tackle the problem due later in the day, said Kenichi Hirano, market analyst at Tachibana Securities.
Investors also digested news of a possible delay in Greece's new austerity package, a deal necessary for the debt-hit nation to receive the next tranche of its international bailout.
In Tokyo trade, exporters fell as the yen remained stubbornly high, despite losing some ground in Friday's morning session.
Honda Motor was off 1.16 percent at 2,367 yen and Sony was down 1.57 percent at 873 yen, with the company saying Thursday that the head of its software division was leaving the electronics giant.
On currency markets, the dollar bought 79.59 yen, from 79.43 yen in New York late Thursday, while the euro was higher at $1.2777 from $1.2748.
Against the Japanese currency, the euro bought 101.69 yen from 101.28 yen.