The Nikkei share average fell 1.97% to 21,046.24 points, hitting a one-month low and marking its second biggest slide so far this year only after a 3% plunge on March 25.

The broader Topix fell 2.11% to a one-month closing low of 1,534.27.

"The earnings of global manufacturers will be soft for now. Investors are on the sidelines and waiting to buy on dips only if the Nikkei falls below 21,000," said Takashi Hiroki, chief strategist at Monex Securities.

As the U.S. earnings season kicked off, weak results from railway transport company CSX Corp stoked concerns that the protracted trade standoff between the United States and China could hurt the profits of U.S. companies.

The outlook is seen even bleaker in Japan as companies struggle with the U.S.-China tariff war amid deteriorating global conditions that have dragged on its exports.

Japan's June exports to China dropped more than 10% from a year earlier, its sixth fall in the past seven months, trade data showed on Thursday.

Ahead of Japanese earnings seasons that will start later this month, Canon fell 4.0% after the Nikkei business daily reported its operating profit was on track to sink 40% this year.

NOK Corp fell 6.4% after the manufacturer of sealant products slashed its earnings outlook, cutting its annual operating profit estimates by 34% on weak sales of car-related products in North America and China.

Nikkei's slide accelerated after a few major technical support levels, including 25- and 50-day moving averages.

Some brokerages bought a large amount of Nikkei put options with strike price of 20,000 -- essentially bets that the Nikkei will fall below that level -- to cover their trade with clients, further weakening the mood.

As a result, the Nikkei volatility index, which hit two-year low of 13.01 the previous day, jumped to 16.44, making the biggest jump in nearly four months.

A broad range of shares came under pressure, including both cyclicals as well as defensive shares, with decliners outnumbering advancers by 96 to 2 on the main board.

Some shares with link to animation-making industry were hit after more than 10 people are feared dead in a suspected case of arson at an animation studio in Kyoto.

Cinema company Toho fell 4.5% while Toei Animation  dropped 3.2%. Entertainment firm Bandai Namco lost 3.2%.

Elsewhere, Akebono Brake Industry Co Ltd rose 7.8% after the troubled car parts maker said it expects to receive investment from a corporate turnaround fund to help restructure its money-losing business.