"Japanese stocks fell, carrying over the negative tone in US stocks," Okasan Online Securities said in a note.
"The yen strengthened against the dollar and the losses of Hong Kong shares weighed on the market," it said. The dollar traded at 108.35 yen against 108.51 yen in New York Wednesday afternoon. Hong Kong's Hang Seng Index was down after Wednesday's demonstrations against the planned extradition law, which many fear will entangle people in China's courts and hammer the city's reputation as an international business hub. But the impact of the selling was partially eased by hopes for US interest cuts, Okasan said, with the Federal Reserve set to hold a policy meeting next week.
Wall Street stocks sagged for a second straight session Wednesday, with petroleum-linked shares sinking with oil prices, and banks falling on worries over economic growth.
Concerns over the trade war were lingering though US President Donald Trump said he had "a feeling that we're going to make a deal with China".
He expects to meet President Xi Jinping at a G20 summit in Japan later this month.
Energy companies fell on lower oil prices, with Inpex dropping 1.42 percent to 901.9 yen. Heavy selling also hit the semiconductor sector. Chip-testing device maker Tokyo Electron tumbled 4.20 percent to 14,910 yen. Takeda Pharmaceutical fell 1.44 percent to 3,760 yen after advisory firm Institutional Shareholder Services recommended against reappointing President and Chief Executive Christophe Weber, citing the company's low returns on investment.