The Tokyo Stock Exchange's benchmark 225-issue Nikkei average briefly slipped below 16,000 for the first time in almost a year on Wednesday morning.
The Nikkei finished at 16,044.44, down 274.29 points Wednesday. The broader Topix index of all first section issues fell 14.91 points to 1,504.93, after slipping below 1,500 for the first time in seven months.
The Nikkei last slipped below 16,000 on May 31, 1999, when it hit 15,901.80 before closing at 16,111.65. It slipped to a low of 15,876.34 in early trading Wednesday.
The fact that the yen remained high against the dollar also encouraged investors to sell shares of export-oriented companies.
The yen was trading at 106.55-58 at noon.
An investment information manager at Nomura Securities Co. attributed the downtrend in Tokyo share prices to the continuing fall in New York's Nasdaq composite index. The technology-heavy Nasdaq plunged 199.66 points to hit this year's closing low of 3,164.55 overnight. The manager said fears are growing that the index may slip below 3,000.
"Tokyo stock prices will suffer heavy damage if the Nasdaq slips below that crucial line," he said.
Government officials, however, tried to downplay the stock plunge. The economy "is continuing to improve gradually, and there are no changes in the economic fundamentals that would invite a fall in share prices," said Chief Cabinet Secretary Mikio Aoki.