Market players said the Nikkei was likely to trade between 11,200 to 11,450 on Tuesday after ending up 2.4 percent to 11,662.52, its highest level since late September 2008.

Nikkei futures in Chicago closed at 11,185, down 4.0 percent from the close in Osaka of 11,650.

Analysts said that most selling could come in early morning trade as investors who bought Monday will likely unwind their positions immediately. They added that such stocks as Sony Corp , Mazda Motor Corp and Nikon Corp, which are sensitive to the euro zone economy, will likely suffer a big sell-off.

"The stock market hates uncertainty the most. As aggressive buying lifted the market sharply yesterday, we will likely see the opposite today," said Toshihiko Matsuno, a senior strategist at SMBC Friend Securities.

He added that the Nikkei's support line is seen at its 25-day moving average of 11,144.65 for this week.

On Monday, US stocks suffered their biggest drop since November after a strong showing in Italian elections by groups opposed to the country's economic reforms triggered worry that Europe's debt problems could once again destabilize the global economy.

Against the yen, the euro hit 118.86 yen, the weakest since Jan. 24, while the dollar dropped to 91.75 yen , reversing earlier gains that drove it to a more than 33-month high of 94.76 yen, according to Reuters data.

Italy's centre-left coalition holds a slim lead over former Prime Minister Silvio Berlusconi's centre-right bloc in the election for the lower house of parliament, three TV projections indicated. But any government must also command a majority in the Senate, a race that is decided by region.

On Monday, the market was boosted by news that the government was likely to nominate Asian Development Bank President Haruhiko Kuroda, an advocate of aggressive monetary easing, as its next central bank governor.