TOKYO (AFP) – Tokyo’s key Nikkei 225 index plunged more than 2 per cent at the open on Tuesday (Sept 21), extending Wall Street falls on contagion fears from the expected collapse of debt-plagued Chinese property giant Evergrande.

The benchmark Nikkei 225 index fell 2.07 per cent or 630.51 points to 29,869.54 in early trade, while the broader Topix index fell 2.21 per cent or 46.36 points to 2,053.81.

Evergrande, one of China’s biggest developers, is on the brink of collapse as it wallows in debts of more than US$300 billion (S$405.6 billion).

There are fears that the Chinese authorities may not be able to contain the fallout of the firm’s potentially disorderly collapse, which could affect many other companies and poses contagion risks, experts say.

“The Japanese market, which was closed on Monday, is expected to be dominated by sell orders, with investors discouraged by the global market rout over the financial crisis at China’s Evergrande,” senior strategist Yoshihiro Ito of Okasan Online Securities said in a note.

“The market will continue to be volatile, with trading volume already expected to shrink” ahead of the US Federal Reserve’s meeting this week, he added.

The US dollar fetched 109.45 yen in early trade, against 109.38 yen in New York.

Among major shares in Tokyo, Nippon Steel was off 3.39 per cent, Panasonic was down 2.19 per cent and Sony slipped 0.79 per cent.

On Wall Street overnight, the Dow ended down 1.8 per cent at 33,970.47, the broad-based S&P finished down 1.7 per cent and the tech-rich Nasdaq fell 2.2 per cent.