The benchmark Nikkei 225 Index is down 560.38 or 2.06 percent at 26,593.45, after hitting a low of 26,515.06 earlier. Japanese shares ended significantly lower Thursday ahead of the holiday on Friday.
Market heavyweight SoftBank Group is losing more than 4 percent and Uniqlo operator Fast Retailing is down more than 1 percent. Among automakers, Honda is declining more than 5 percent and Toyota is down more than 3 percent.
In the tech space, Advantest and Tokyo Electron are losing more than 3 percent each, while Screen Holdings is slipping more than 5 percent. In the banking sector, Sumitomo Mitsui Financial and Mizuho Financial are losing more than 2 percent each, while Mitsubishi UFJ Financial is slipping almost 4 percent.
The major exporters are weak, with Panasonic and Sony losing almost 4 percent each, while Canon down almost 2 percent and Mitsubishi Electric is slipping more than 3 percent.
Among the other major losers, Inpex is plunging almost 8 percent, while Fujikura and Idemitsu Kosan are losing more than 6 percent each. Mazda Motor, Fuji Electric, Toray Industries, Pacific Metals are slipping almost 6 percent, while Kawasaki Heavy Industries, NTN, Nissan Motor, Showa Denko K.K. and Subaru are down more than 5 percent each. Nikon is dropping almost 5 percent.
Conversely, there are no major gainers.
In economic news, the manufacturing sector in Japan continued to expand in September, albeit at a slower pace, the latest survey from Jibun Bank revealed on Monday with a manufacturing PMI score of 51.0. That's down from 51.5 in August, although it remains above the boom-or-bust line of 50 that separates expansion from contraction. The survey also showed that the services PMI improved from 49.5 in August to 51.9 in September, while the composite PMI went from 49.4 to 50.9.
In the currency market, the U.S. dollar is trading in the higher 143 yen-range on Monday.
On Wall Street, stocks moved sharply lower during trading on Friday, extending the notable downward move seen over the past several sessions. With the steep drop on the day, the Dow dropped to its lowest closing level in over a year, while the Nasdaq and the S&P 500 hit three-month closing lows.
The major averages rebounded from their lows of the session going into the close but continued to post steep losses. The Dow tumbled 486.27 points or 1.6 percent to 29,590.41, the Nasdaq dove 198.88 points or 1.8 percent to 10,867.93 and the S&P 500 plunged 64.76 points or percent to 1.7 percent to 3,693.23.
The major European markets also showed significant moves to the downside on the day. While the French CAC 40 Index plummeted by 2.3 percent, the U.K.'s FTSE 100 Index and the German DAX Index both dove by 2.0 percent.
Crude oil prices fell sharply on Friday, pushing the most active crude futures contract to their lowest close in about seven months. Weak outlook for energy demand due to a possible global recession outweighed concerns about tight supplies. West Texas Intermediate Crude oil futures for November ended lower by $4.75 or 5.7 percent at $78.74 a barrel, the lowest settlement since January.