Tokyo stocks fell 1.55 percent on Monday as the yen rebounded from a recent sell-off while eyes are on North Korea to see if it launches a missile to mark the birthday of founder Kim Il-Sung.
The Nikkei 225 index at the Tokyo Stock Exchange closed down 209.48 points at 13,275.66, while the Topix index of all first-section issues was down 1.27 percent, or 14.58 points, at 1,133.99.
"Stocks are long overdue for profit-taking, particularly as the yen is taking a break from recent steep declines," said Tachibana Securities market analyst Kenichi Hirano, adding that the Nikkei index "still has more room to fall."
Eyes were also on North Korea Monday.
Despite tension-reducing noises from Seoul and Washington, there are fears the secretive communist state could mark the birthday of its late founder by launching a missile.
North Korea has a habit of linking high-profile military tests with key dates in its annual calendar. The centenary of Kim's birth last year was preceded by a long-range rocket test that ended in failure.
South Korean intelligence says the North has had two medium-range missiles primed and ready to fire for nearly a week.
On Friday US stocks closed lower after two record-setting days, with sentiment dulled by poor US retail sales figures for March and more prospects of slow economic growth around the world.
The Dow Jones Industrial Average finished virtually flat, down 0.08 at 14,865.06, while the broad-based S&P 500 fell 4.15 points or 0.28 percent to 1,588.86.
The dollar was changing hands at 98.03 yen in afternoon Asian trade Monday, slightly up from 97.83 in New York Friday afternoon but down from 99.46 yen quoted around the time of Tokyo's stock market close on Friday.
The euro bought 128.13 yen, compared with 127.93 in US trading and 130.43 yen in Tokyo Friday, while holding steady at $1.3079.
Honda Motor was down 1.76 percent at 3,885 yen, while Kyocera was down 2.08 percent at 8,930 yen.
Sumitomo Metal Mining was down 5.85 percent at 1,303 yen as gold fell sharply Friday in New York, officially reaching bear-market territory.
Shares in struggling Japanese electronics maker Sharp rocketed 10.44 percent to 370 yen after a weekend report that it plans to sell its entire 9.2 percent stake in Pioneer. Shares in Pioneer climbed 4.28 percent to 219 yen.
-- Dow Jones Newswires contributed to this article --