By Brad Frischkorn

TOKYO--Tokyo stocks slid to a fresh two-and-a-half month low Thursday as investors reacted to a sharply weaker dollar and a Wall Street selloff after the U.S. Federal Reserve's move to further scale back its bond-buying program.

The negative overall mood cast a pall on the market just as the quarterly earnings season gets into full swing, leading to sharp price declines for major companies announcing business results.

Read Asia Markets live blog recap for Thursday's session

Among major market movers, Canon lost 1.8% despite posting a net profit increase Wednesday of 5% for the October-December quarter. Kyocera lost 4.4% after revising down its full-year estimates as a result of the slowdown in smartphone-related orders.

Sumitomo Mitsui Financial Group dropped 5.3% despite posting a record nine-month consolidated net profit, and while Shinsei Bank fell 8.1% after it cut its full-year consolidated net profit view.

A sharp selloff in the dollar hurt currency-sensitive exporters, such as industrial robot maker Fanuc, which lost 3.7%, and auto parts manufacturer Denso , which shed 4.1%.

The greenback was changing hands at around Y102.47 at the close of TSE trading at 0600 GMT, well down from above Y103 at the same time Wednesday. A weaker dollar makes it harder for exporters to cut the prices of goods they sell overseas.

The Nikkei Stock Average fell 2.5% to 15,007.06, largely erasing the prior session's 2.7% gain. Intraday, the index fell to its lowest level since Nov. 14.

"The Wednesday market rise was overdone, and the turmoil in emerging markets doesn't look like it is close to dying down," said Yoshihiro Okumura, general manager at Chibagin Asset Management.

He added that while the continuation of the Fed's tapering program naturally implies higher U.S. interest rates, a stronger dollar and a weaker yen -- all of which are fundamentally positive for Japan stocks -- the "risk-off" investor mood and jolt to the world's growth markets is trumping all other effects.

The Fed decided to continue tapering its bond-buying program by $10 billion, in line with expectations.

Shares garnering special individual interest Thursday included Nintendo , which rose early on the back of its Y125 billion buyback plan announced Wednesday. But Thursday's business strategy conference with analysts was criticized for lacking substance, leading to a 4.3% loss on the day.

News that China's Lenovo Group aims to acquire both Motorola's cellphone handset business and IBM's (IBM) low-end server business was negative for several of Apple's iPhone parts suppliers in Japan. Shares of Ibiden lost 3.2%, while Taiyo Yuden fell 3.9% and Rohm slipped 4.4%.

March Nikkei 225 futures closed down 2.5% to 14,990 on the Osaka Securities Exchange.

Write to Brad Frischkorn at bradford.frischkorn@wsj.com

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