Tokyo stocks closed dramatically lower on Friday after Wall Street shares tumbled over concerns about the US economy and a stronger yen weighing on the market.

The benchmark Nikkei 225 index closed down 5.81 percent, or 2,216.63 points, at 35,909.70 -- the second-biggest points drop in history, and the largest fall in percentage terms since March 2020 at the start of the pandemic.

The broader Topix index lost 6.14 percent, or 166.09 points, to 2,537.60.

"The chain of stock market declines did not stop," IwaiCosmo Securities said following US and European index falls.

Most Tokyo shares faced sell-offs from early trade on Friday, having ended sharply lower the previous day, it added.

On Wall Street, all three major indices finished decisively lower as weak manufacturing data sparked worries about a US recession, with the tech-rich Nasdaq index falling the most at 2.3 percent.

"Following falls in New York stocks, the BoJ's additional rate hike, and the yen's further appreciation, market sentiment is rapidly cooling," Daiwa Securities said.

The yen has strengthened since the Bank of Japan's rate hike decision earlier this week and US Federal Reserve comments hinting at a rate cut as soon as September.

The dollar fetched 149.24 yen, down from 149.66 yen in New York and lower than rates of around 152 yen before the BoJ policy decision on Wednesday.

Among major shares, Tokyo Electron lost 11.98 percent to 27,055 yen and SoftBank Group was down 8.03 percent to 7,868 yen. Toyota ended 4.22 percent lower at 2,585 yen.