Tokyo stocks plunged Friday, driven by the yen's rise against the U.S. dollar and escalating tensions in the Middle East amid a cautious mood ahead of U.S. jobs data due later in the day.
The 225-issue Nikkei Stock Average ended down 781.06 points, or 1.96 percent, from Thursday at 38,992.08. The broader Topix index finished 29.38 points, or 1.08 percent, lower at 2,702.62.
On the top-tier Prime Market, decliners were led by precision instrument, electric appliance and securities house issues.
The dollar was weak mostly in the lower 151 yen level, with the currency briefly falling to the upper 150 yen zone, as Bank of Japan Governor Kazuo Ueda indicated in an interview with the Asahi Shimbun published Friday that the central bank is likely to consider another interest rate hike between summer and autumn.
At 5 p.m., the dollar fetched 151.33-35 yen compared with 151.30-40 yen in New York and 151.68-70 yen in Tokyo at 5 p.m. Thursday.
The euro was quoted at $1.0838-0839 and 164.02-06 yen against $1.0832-0842 and 163.95-164.05 yen in New York and $1.0856-0858 and 164.67-71 yen in Tokyo late Thursday afternoon.
The yield on the bellwether 10-year Japanese government bond ended 0.010 percentage point lower from Thursday's close to 0.765 percent as the bonds, seen as a safe asset, drew buying amid heightening tensions in the Middle East.
The Nikkei benchmark briefly dropped 2 percent as investors' risk aversion grew following a batch of negative trading cues, also including declines in U.S. shares overnight.
Geopolitical concerns grew after Israel's suspected killing of Iranian generals in Damascus earlier this week raised the prospect of potential retaliation by Iran, with Prime Minister Benjamin Netanyahu vowing to defend the country if attacks occur.
Market players were also cautious ahead of a key monthly U.S. jobs data release for March that could reveal clues on the timing of possible interest rate cuts, after some Federal Reserve officials suggested that rate cuts might not be imminent.
"Worsening conditions in the Middle East and an unclear outlook for the Fed's interest rate cuts accelerated the decline," said Makoto Sengoku, senior equity market analyst at Tokai Tokyo Intelligence Laboratory Co.
"The sharp fall came at a time when investors adjusted their holdings before the release of earnings results in the United States and Japan starting later this month," Sengoku said.
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