Japan's Nikkei share average fell on Monday as investors rushed to sell shares after escalating violence in the Middle East and a weekend selloff on Wall Street.
Japanese semiconductor shares tracked their U.S. counterparts lower after a media report said China had ordered the country's biggest telecom companies to phase out foreign chips.
The Nikkei index fell 0.74 percent to close at 39,232.80 points, but recovered some early losses that led to a 1.78 percent decline.
The broader Topix index also fell 0.23 percent.
Sentiment, which had been weak after Wall Street's main indexes lost more than 1 percent on Friday, deteriorated after Iran launched an unprecedented attack on Israel over the weekend.
Risk aversion is already weighing on Japanese stocks, said Kazuo Kamitani, equity strategist at Nomura Securities.
Astellas Pharmaceutical Co led the declines on the Nikkei, falling nearly 8 percent, sending the pharmaceutical sector index down 1.86 percent to the bottom of the Tokyo Stock Exchange's 33 sub-indexes.
Takashimaya was the second biggest loser on the Nikkei index, down 6.66 percent.
Semiconductor testing machine maker LaserTech led the chip sector's losses, falling 2.59 percent. Shares of the company's biggest rival, Advantest, also fell 1.31 percent.
Shipping and oil stocks rose 2.41 percent and 1.02 percent, respectively, amid rising tensions in the Middle East.
The utilities sector index led the gains, rising 3.11 percent, supported by Tokyo Electric Power Company, which jumped 5.83 percent amid new steps toward resuming operations at the Kashiwazaki-Kariwa plant, the world's largest nuclear plant.
