TOKYO - Tokyo stocks tumbled 2.35 per cent in early trade on Monday amid investor worries over the defeat of ruling parties in French and Greek elections, and following a dip on Wall Street.
The Nikkei 225 index at the Tokyo Stock Exchange was down 219.99 points at 9,160.01 after falling nearly 3.0 per cent in the first few minutes of trading.
The yen meanwhile rose to its highest level since mid-February against the euro as markets fretted about the poll results having a knock-on effect on European austerity measures.
"The biggest factor is going to be the stronger yen. Investors were hoping for the triumph of more austerity-friendly governments in both France and Greece," said Tsutomu Yamada, a market analyst at kabu.com Securities.
The euro bought 103.77 yen (S$ 1.63) in Tokyo morning trade after falling to 103.22 yen earlier Monday, the single currency's lowest level since mid-February and sharply down from 104.50 yen in New York late Friday.
Against the dollar, the euro briefly fell to its lowest level in more than three months before recovering to US$1.2981 (S$1.62), still down from US$1.3082 on Friday in New York.
In France, Socialist challenger Francois Hollande was set to be confirmed as France's president-elect, after incumbent Nicolas Sarkozy conceded defeat, according to nearly complete results.
Analysts said Hollande's victory underscored the politically difficult task of selling austerity measures designed to tackle eurozone nations' huge debts, with Hollande advocating economic growth over deep public spending cuts.
Greek voters showed their lack of enthusiasm for belt tightening, dousing hopes that Athens will stick to its austerity pledges as parties opposing more cuts won almost 60.0 per cent support in a general election Sunday.
The two main parties suffered heavy losses, with the conservative New Democracy and the left-wing Pasok getting just 32.0 to 34.5 per cent between them, down from 77.4 per cent at the last polls in 2009.
New Democracy, led by Antonis Samaras, remained the largest party but it fell short of an absolute majority in parliament.
The Tokyo market was also weighed down by mostly disappointing US economic data released last week.
The Dow Jones Industrial Average was off 1.27 per cent to 13,038.27 on Friday after data showed the world's biggest economy generated only 115,000 net new jobs last month, less than half the pace at the beginning of the year, although the unemployment rate dipped slightly to 8.1 per cent from 8.2 per cent.
Meanwhile, the Institute for Supply Management's services index fell to 53.5 from 56.0, showing the US services sector continued to expand, but only sluggishly.
Companies surveyed told the ISM that business was better than last year but that expansion had slowed, with some citing the effect of higher oil prices.