Japan's Nikkei stock average lost 1.5 percent on Thursday, with Honda Motor Co <7267.T> and other exporters down as the yen climbed to a 2-month high on the dollar after the Federal Reserve cut its outlook for the U.S. economy.
Tech shares fell in the wake of losses by their U.S. peers, with Sony Corp <6758.T> dropping 1.8 percent, despite saying it plans to halve the number of its parts and materials suppliers.
The dollar extended losses made the previous day to fall 0.4 percent to 94.46 yen, also hit after the Fed said it considered buying more securities at its last policy meeting -- a move that would inject more dollars into the financial system.
This is hitting exporters and high-tech shares, and a dollar fall toward 93-94 yen is starting to look possible, dampening interest in exporters, said Hiroaki Osakabe, a fund manager at Chibagin Asset Management.
The big issue is whether the yen is really heading into a rising trend or not.
Investors fret about a stronger yen because it eats into exporters overseas profits when repatriated.
But market participants also said that sharp falls are unlikely at this point, with support for the Nikkei around 9,000 -- where 25-day moving average currently comes in.
The benchmark Nikkei <.N225> lost 140.63 points to 9,204.01, while the broader Topix <.TOPX> fell 1.4 percent to 873.90.
The plan by Sony, which expects a second straight year of losses, came in addition to a current plan to cut fixed costs by more than 300 billion yen ($3.2 billion).
Osakabe said the move didn't come as much of a surprise given the company's push to cut costs as it grapples with weak global demand for consumer electronics and the strong yen.
While the move will of course hit suppliers hard, it's probably just part of its overall restructuring and cost-cutting efforts -- and there are limits to how much costs can be reduced by cutting jobs, he added.
Among exporters, Honda fell 2.8 percent to 2,615 yen and Canon Inc <7751.T> losing 2.4 percent to 3,230 yen. Toyota Motor Corp <7203.T> fell 2.2 percent to 3,580 yen.
Tech shares were hit by a double punch of the yen's advance and a fall in U.S. tech shares after a negative outlook for 2009 from Hewlett-Packard
Kyocera Corp <6971.T> lost 1.5 percent to 7,270 yen and TDK Corp <6762.T> lost 2.1 percent to 4,260 yen.
(Reporting by Elaine Lies; Editing by Edwina Gibbs)