Tokyo stocks opened down 1.37 percent on Tuesday, tracking overnight falls on overseas markets amid doubts over the strength of a European pact aimed at ending the eurozone financial crisis.
The Nikkei 225 index at the Tokyo Stock Exchange opened down 118.30 points at 8,535.52.
The euro fetched $1.3176 and 102.69 yen in early Asian trade, down from $1.3188 and 102.72 yen in New York late Monday. The dollar was flat against the Japanese currency at 77.90 yen.
US stocks followed their European counterparts lower Monday. The Dow Jones Industrial Average fell 1.34 percent to finish the session at 12,021.39.
European Union leaders at talks last week made a move towards tougher fiscal rules but Kenichi Hirano, operating officer at Tachibana Securities, noted that criticisms over the summit by credit-rating companies sent US stocks tumbling.
Choppy trading is likely to continue in the coming sessions as market participants react to comments from senior European government officials and ratings firms, Hirano said.
The euro's renewed weakness is also likely to hit Japanese exporters, brokers said.
Fitch Ratings said despite the decision of most EU countries to tighten budgetary coordination to resolve the debt crisis, "market tension remains high."
Moody's Investors Service said that a communique published Friday following the EU summit offered "few new measures".
Moody's said it would review ratings of all European Union nations early next year in light of the failure to come up with the measures it believed necessary to tame the eurozone debt crisis.