Japan's Nikkei share average fell to a four-month low on Tuesday, as investors reduced their equity holdings on their first trade after a long weekend and as a spike in coronavirus cases beyond mainland China threatened the global economy. The Nikkei share average tumbled 3.3% to 22,605.41, its biggest intraday drop in 14 months, and closed at its lowest since late October.
The index showed a catch-up reaction to falls in global stocks on Monday, when Japanese markets were closed for the emperor's birthday celebrations.
The broader Topix declined 3.33% to 1,618.26, with 98% of the stocks on the main board in the red, the highest ratio in more than two years.
The coronavirus death toll climbed to seven in Italy on Monday and several Middle East countries were dealing with their first infections, feeding worries it could turn into a pandemic.
"In addition to rising infections, day by day more companies are refraining from events and business trips. That will surely have an impact on upcoming economic indicators," said Seiji Arai, senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities.
Railway operators, normally seen as defensive plays, were hit hard after the Japanese government advised citizens and companies against unnecessary large gatherings, prompting the cancellation of many events and trips.
Central Japan Railway, which runs bullet trains between Tokyo and Osaka, fell 6.3% to its lowest close in nearly four years.
East Japan Railway dropped 2.9% to a three-and-a-half-year low, while Keisei Electric Railway ended 5.5% weaker.
Beer makers also came under pressure, with Asahi Group Holdings, Kirin Holdings and Suntory Beverage falling between 3.9% and 6.3%.
Advertising firm Dentsu plunged 8% to hit a six-and-a-half-year low amid mounting doubts whether the Tokyo Olympics will be held as planned.
Drugmakers, which had relatively done well since the outbreak started in December last year, also succumbed to profit-taking.
Daiichi Sankyo dropped 5%, while Astellas Pharma lost 4.8% and Takeda Pharmaceutical shed 3.8%.
The yen's sharp rebound over the past couple of sessions hit exporters. Shares of Mazda Motor fell 6.8%, while Toyota Motor ended down 3.4%.
Bucking the sombre mood, Fujifilm Holdings jumped 2.8% to hit a record high following a media report that Japan is considering using anti-flu drug Avigan, manufactured by its subsidiary, to treat coronavirus.
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