Japanese stocks tumbled to a more than one-week low on Wednesday morning, as political uncertainty in Greece spooked world markets already under strain from a slide in crude oil prices and worries over global growth.
The resulting flight to safety drove the yen higher and took a toll on exporters.
The Nikkei benchmark dropped 1.5 percent to 17,542.67 in mid-morning trade after falling to as low as 17,518.05 earlier, the lowest since Dec. 2.
Traders said the benchmark should be supported by its 25-day moving average of 17,378 for now on hopes that the Bank Of Japan would buy exchange traded funds, or ETFs, when the market falls.
On Monday and Tuesday, the central bank bought a combined 74.8 billion yen worth of ETFs and 1.3 billion yen worth J-REITs.
Brent crude was down 1.6 percent to $65.78 during Asian trade after hitting a fresh five-year low of $65.29 the previous day. Oil prices have been under pressure amid a massive supply glut, after OPEC decided against an output cut.
European political woes added to the anxiety, after the government in Athens brought forward a presidential vote that heightened uncertainty over the country's transition out of its IMF/EU bailout.
"Market euphoria over the recent positive news is fading out for now as investors shift to risk-averse from risk-taking," said Hiroyuki Nakai, chief strategist at Tokai Tokyo Research Center.
The Nikkei has gained 12 percent since the BOJ's surprise easing on Oct. 31.