Eurozone finance ministers have asked Cyprus to rethink plans for a one-off tax of 6.75 percent on savings of up to 100,000 euros, which are linked to the country getting a controversial 10 billion euro bailout.
Banks in Cyprus closed as people tried to withdraw funds from cash machines and they are likely to remain so until Thursday, as efforts to revise an international bailout package continue.
A parliamentary vote on the package is expected.
As a condition for Cyprus's much-needed bailout, the EU and IMF on Saturday imposed a levy on all deposits in the island's banks.
Deposits of more than 100,000 euros will be hit with a 9.9 percent charge and 6.75 percent for anything below that threshold.
Tokyo stocks fell 2.71 percent at the close Monday
after the yen soared on the news.
The benchmark Nikkei 225 index was down 340.32 points at 12,220.63, while the Topix index of all first-section issues shed 23.31 points.
They did recover on Tuesday.
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