Japan's benchmark Nikkei stock index, the 225-issue Nikkei Stock Average, ended down 566.35 points, or 1.40 percent, from Friday at 39,803.09, its lowest close since March 18.
The broader Topix index, meanwhile, finished 47.40 points, or 1.71 percent, lower at 2,721.22.
After advancing over 300 points in early trading, the Nikkei gradually pared gains, dipping over 600 points at one point and dropping below the 40,000 threshold.
Investors typically sell stocks to secure profits on the first day of the new fiscal year, analysts said, adding sectors that have surged recently, such as chip manufacturers and automakers, were particularly targeted for profit-taking.
On the top-tier Prime Market, decliners were led by oil and coal product, securities house and transportation equipment issues.
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