Japanese shares fall as VW scandal hits carmakers

Japanese shares fell as trading restarted after a three-day holiday, with shares in carmakers hit by the fallout from the VW emissions scandal.

The benchmark Nikkei 225 index closed down 2.8% at 17,571.83.

Shares in car giants Toyota, Honda and Nissan all fell, as they followed the downward trend for the sector after the revelation that Volkswagen manipulated US diesel car emissions tests.

There are concerns the scandal will intensify scrutiny on all carmakers.

Sentiment was also hit by some downbeat manufacturing surveys. The preliminary Nikkei/Markit purchasing managers' index for Japan's manufacturing came in below expectations for September at 50.9.

Although a reading above 50 indicates expansion in the sector, the reading was the lowest since June and down from August's figure of 51.7.

On Wednesday, a similar survey of Chinese factory activity recorded the lowest reading for six and a half years.

In China, the Shanghai Composite closed up 0.9% at 3,142.69, while Hong Kong's Hang Seng index fell 1% to 21,095.98.

The mainland market has stabilised in recent weeks after dropping more than 40% from its peak in mid-June.

In Australia, the S&P/ASX 200 index ended up 1.5% at 5,071.70, while South Korea's Kospi index finished 0.1% higher at 1,947.10.

Markets in Indonesia, Malaysia and Singapore were closed for a public holiday.