The Nikkei lost 1.63% to 28,283.92, a low last seen on Oct. 13, after sliding 2.5% on Friday.
The broader Topix dropped 1.84% to 1,948.48, falling below its 200-day moving average for the first time since August 2020.
Sentiment deteriorated after Japanese Prime Minister Fumio Kishida said Japan will bar entry to foreign visitors from Nov. 30 as it seeks to respond to the new Omicron variant.
Travel-related sectors were the worst hit, with Tokyo Disney Resort operator Oriental Land Corp falling 4.8%.
Central Japan Railway dropped 4%, while East Japan Railway lost 3.9% and Keisei Electric Railway sank 7.6%.
Carmakers dropped as the yen bounced back against the dollar, with the Topix transport equipment index shedding 3.05%, its biggest fall in more than three months.
Nissan Motor lost 5.6%, while Suzuki Motor slid 3.9% and Honda Motor slipped 3.8%. Industry leader Toyota Motor fell 3%.
Still, some investors are cautiously buying on dip, drawing comfort from a report that a South African doctor who had treated cases said symptoms of Omicron were so far mild.
“When the Delta variant was designated as VOC (variant of concern) in May, the market went through a correction of about 7%. Considering the difference in the availability of vaccines and oral drugs for COVID-19 since then, I would think the market has more or less priced in the risk from Omicron,” said Okasan Securities chief strategist Fumio Matsumoto.
Only one in every 14 stocks has gained. Turnover at the Tokyo Stock Exchange’s main board soared to 3.394 trillion yen ($30 billion), about 20% higher than the long-term average.
