TOKYO - Tokyo stocks opened 1.73 per cent lower Wednesday after US shares suffered broad declines over concerns about the limits of global central bank policy.
The benchmark Nikkei 225 index slipped 229.96 points to 13,087.66 at the start.
The Bank of Japan (BoJ) opted against additional stimulus measures on Tuesday, which triggered a sharp rise in the yen against other major currencies in New York.
"The sharp yen rise is a warning flag and will lead to abrupt selling at the open," SMBC Nikko Securities general manager of equities Hiroichi Nishi told Dow Jones Newswires before the opening bell.
"Confusion over proper central bank policy, especially in the wake over the Bank of Japan's decision yesterday and governor (Haruhiko) Kuroda's comments after the market close, will keep the downward pressure on equities today."
The BoJ on Tuesday delayed expanding April's huge stimulus scheme after a two-day meeting.
Although it said Japan's economy was "picking up", the BOJ warned of possible headwinds caused by uncertainty in Europe and the United States, after announcing in April that it would unleash a flood of easy money to try to drag the country out of long-running deflation.
The BoJ's status-quo policy decision revived concerns about the winding down of central bank stimulus measures, triggering a yen rise.
On forex markets, the dollar lost to 96.12 yen in Tokyo morning trade, compared with 98.11 yen on the previous day in Tokyo and 96.01 yen late Tuesday in New York.
The restraint in Japan also raised questions about the US Federal Reserve's future direction of policy measures ahead of next week's Federal Open Market Committee meeting.
The Fed has signalled that it wants to begin to craft a plan for tapering its US$85 billion (S$105 billion) a month bond-purchase programme.
The Dow Jones Industrial Average fell 116.57 (0.76 per cent) to 15,122.02.