A man looks at his watch as he passes an electronic board displaying a graph of currency rates outside a brokerage in Tokyo.

Tokyo - Tokyo stocks slumped 2.98 percent to a two-month low on Friday as investors reacted to US President Barack Obama's announcement that he had authorised air strikes on Iraq.

The Nikkei 225 index fell 454.00 points to close at 14,778.37, the lowest since late May, as Obama's comments sparked a sharp uptick in the yen, which is bad for Japanese shares.

The Topix index of all first-section shares fell 2.37 percent, or 29.86 points, to 1,228.26. - Sapa-AFP