Tokyo: Tokyo`s benchmark Nikkei index dropped 3.18 percent in early trade Tuesday, extending a global equities rout on worries over China`s economy and a drop in commodity prices.

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The Nikkei 225 at the Tokyo Stock Exchange dived 561.24 points to 17,083.87, while the broader Topix of all first-section shares tumbled 3.38 percent, or 48.67 points, to 1,390.00.

Wall Street finished lower Monday with petroleum-linked firms especially weak as underwhelming Chinese government data hammered prices of key commodities such as oil and copper, and stirred worries about the health of the world`s number two economy.

The government data showed China`s crucial industrial companies saw profits fall 8.8 percent in August from a year ago -- hit by last month`s shock yuan devaluation, weak demand and plunging share prices.

"The slowdown in China is spreading to other Asian economies, Brazil and Australia, and weakness in emerging countries could echo throughout the overall world economy," Toshihiko Matsuno, chief strategist at SMBC Friend Securities, told Bloomberg News.

"We still don`t know when market fears will end about China`s slowdown, and because of this investors are turning to cash and safe assets."

The Dow Jones Industrial Average closed down 1.92 percent, while the broad-based S&P 500 shed 2.57 percent and the tech-rich Nasdaq Composite Index tumbled 3.04 percent.

Concerns over the global outlook have pushed investors into lower-risk currencies such as the yen, which is seen as a safe haven in times of turmoil and uncertainty.

In forex trading, the dollar fell to 119.61 yen from 119.93 yen Monday in New York, while the euro slipped to 134.62 yen against 134.83 yen.