The Nikkei share average fell 1.4 percent on Wednesday to a seven-week closing low after disappointing results from Apple Inc results hit the iPhone maker's Japanese suppliers, while printer makers fell after Lexmark International cut its outlook.
Worries about slowing global growth and the deepening euro zone sovereign debt crisis have bitten into U.S. and Japanese corporate earnings. Of 26 U.S. firms that have revised third-quarter profit forecasts since mid-June, 19 have cut them, according to Thomson Reuters I/B/E/S.
The Nikkei dropped 122.19 points to 8,365.90, edging closer to its June 4 low of 8,238.96. The benchmark has fallen 7 percent so far this month, and is down 1 percent this year.
A senior trader said investors were picking up Nikkei put options at 8,000 with August expiry to hedge against further declines.
"There's really nothing to support the market at the moment and it looks like it will sink right through June's lows without any trouble," said Hiroyuki Mutsuro, head of execution support at Mizuho Securities.
"Demand has really cooled in Europe and even firms that have done well on domestic consumption are going to find it hard to maintain their share prices."
Toshiba Corp slumped 7.3 percent to a 40-month low after Apple
Panasonic Corp, another Apple supplier, sagged 5.5 percent to a 32-year low.
Other Apple contractors to suffer included Murata Manufacturing Co Ltd, Foster Electric Co Ltd, Ibiden Co Ltd, Seiko Epson Corp and Taiyo Yuden Co Ltd, down between 4.2 and 7.5 percent.
The broader Topix shed 1.6 percent to 706.46. Trading volume hit a two-week high, with 1.78 billion shares changing hands, up from 1.64 billion on Tuesday and 1.41 billion on Monday.
"The sellers that we seeing were primary long-only," another senior dealer at a foreign bank said, adding that domestic investors bought at around these levels when the Japanese markets bounced on June 4.
"The things that are different this time, though ... the currency is a lot stronger than it was last time, Europe is in a lot worse shape than it was last time and the BOJ, when they are stepping into the market, are buying a much smaller size," he said.
"I would say those things conspire to open the path lower."
With the recent sell-off, the Topix's 12-month forward price-to-earnings ratio slipped to 0.84 to a month low, data from Thomson Reuters Datastream showed.
Japanese firms' one-month earnings momentum -- analysts' earnings upgrades minus downgrades as a total of estimates -- worsened to -4.8 percent from a fall of 2.3 percent last month, Datastream data showed.
That still fared better than the outlook for S&P 500 companies as their earnings momentum deteriorated to -18.4 percent from a fall of 8.4 percent in June.
Canon, Ricoh fall
Japanese printer makers came under pressure after U.S. peer Lexmark reported weaker-than-expected quarterly results on a drop in demand in Europe and a strong dollar, and the company cut its full-year forecast.
Ricoh Co Ltd dropped 5.5 percent, while Konica Minolta Holdings Inc lost 4.3 percent and Canon Inc fell 0.9 percent.
After the bell, Canon cut its full-year operating profit outlook to 390 billion yen from a previously forecast 450 billion yen, buffeted by a euro zone crisis which sent the yen climbing while sapping demand for a key export market.
However, Japan Tobacco Inc advanced 1 percent as investors sought refuge in defensive shares and after Morgan Stanley MUFG lifted the price target of the Japanese company.
Softbank Corp climbed 4 percent, and was the heaviest traded stock on the main board, after Bank of America Merrill Lynch upgraded its rating on the mobile operator to "buy" from "neutral", saying it was the fastest growing among wireless firms and its capex would decline the most in the next two years.
