Asian shares have fallen amid concerns about the economic outlook following worse-than-expected weekly jobless numbers in the US.
Tokyo's Nikkei index was the hardest hit, down 2%, as rumours circulated that the Bank of Japan would hold an emergency meeting.
Policymakers were said to be considering further measures to tackle the strength of the yen.
The yen has again moved near a 15-month high against the dollar.
At the end of Asian trading, it was 85.265 to the dollar, following downward pressure on the US currency after Thursday's disappointing economic news.
The Nikkei closed 2%, or 183.3 points lower at 9179.38. Both the Hang Seng and the Shanghai composite were less than 1% down.
At the start of trading in Europe, major markets suffered smaller falls. The Cac 40, the Dax and the FTSE were flat in the first hour of trading.
The strength of the Japanese currency is a major concern as it puts a strain on exporters, which are crucial to Japan's economy.
Japan's finance minister refused to comment on the issue of whether it would be forced to intervene in the currency markets to try to ease exchange rates.
But Yoshihiko Noda did say he was watching currency moves with "utmost interest" and confirmed Japan was talking to other G7 countries.
"I can't comment on what is being discussed, but we are communicating with each other," Mr Noda said.
Exporters under pressure
Japan's main exporters were amongst the hardest-hit shares, reflecting the impact of the strong yen and concerns about the faltering US recovery.
Toyota, which relies on American consumers for a third of its sales, was down 1.8%. Leading camera maker Canon was 2.2% lower.
Sharp, meanwhile, was down 2.7% after a newspaper reported it would cut its output of LCD panels that it sells to other companies.
At 853 yen, its shares were at their lowest since April last year.
Analysts suggest other LCD firms will have to reduce output because of global over-supply.
It had a knock-on effect across the sector, with component maker JSR down 4.4%.
Major exporters were also affected when the European markets opened, with carmakers hardest hit.
In Germany, BMW, Volkswagen and Daimler were all down more than 1%, while France's Renault was 2.3% lower.