Tokyo - Tokyo stocks dropped 2.03 percent Tuesday as investors locked in profits after the previous day's rise of almost four percent, while the yen rose against the dollar and weak China growth data hit sentiment.
The Nikkei 225 index at the Tokyo Stock Exchange lost 306.95 points to finish at 14,804.28.
The Topix index of all first-section issues fell 1.55 percent, or 18.98 points, to 1,205.36.
On Monday Tokyo shares surged by their biggest margin for 16 months thanks to bargain-buying, a weaker yen and a rally on Wall Street.
However, they could not sustain the advances Tuesday.
“October is typically a volatile month for the market, and thus far it hasn't disappointed,” said Chibagin Asset Management general manager Yoshihiro Okumura.
“Even so, yesterday's surge was beyond most expectations... The volatility is likely to continue for a while, at least until the US (Federal Reserve policy) meeting” on October 28-29, he told Dow Jones Newswires.
Investors will be keeping a close eye on that get-together for clues about its plans for raising interest rates.
On forex markets the dollar slipped to 106.29 yen from 106.92 yen in New York.
Selling pressure grew after China said its economy expanded 7.3 percent on-year between July-September, the slowest since the global financial crisis despite official efforts to shore up growth.
Shares in Takata dived 22.87 percent to 1,686.0 yen on the Nikkei after US authorities urged owners of vehicles with defective airbags made by the firm to seek repairs.
But Fujifilm added 0.17 percent to 3,398.5 yen after jumping more than four percent earlier in the day, following the firm's announcement it would boost its supply of flu drug Avigan, which has been used as an experimental treatment for the Ebola virus. - Sapa-AFP