By V. Phani Kumar

Japanese shares tumbled and the yen appreciated Monday as data showing the nation's economy expanded for the first time in five quarters did little to ease concerns about the health of the world's second-largest economy.

Japan's gross domestic economy expanded at a slightly weaker-than-expected 0.9% in real terms during the April to June period from the previous quarter, on increased exports and a rise in private spending.

But fears remained about business spending, which continued its drop into a fifth straight quarter as companies delayed capital expenditures on new plants and equipment.

"As corporate free cash flow decreases, we expect capex to continue to contract throughout this year," said Junko Nishioka, chief economist for Japan at Royal Bank of Scotland,

"Given exports started to slow down in June, especially to China, and household consumption is quite fragile due to the deterioration in the labor market, we believe GDP will slow in [the third quarter] and beyond. In addition, the effect of the economic stimulus policy packages is likely to gradually diminish," Nishioka wrote in a report.

Japan's Nikkei 225 Average ended the day 3.1% lower at 10,268.61, after ending at its highest level since October on Friday.

The broader Topix Index also declined 2.5%, with exporters hurt by a stronger yen, a decline on Wall Street Friday and a fall in commodity prices.

Shares of Elpida Memory (6665.TO) slipped 3.9%, while Honda Motor Co. (HMC) gave up 3.9%.

The U.S. dollar was buying 94.59 yen, compared with 94.88 yen in New York and 95.12 yen in Asia late Friday. Other currencies also lost ground against the yen on risk aversion. The euro was recently buying 133.61 yen versus 134.35 yen in New York Friday, while the Australian dollar tumbled to 77.49 yen from 79.03 yen.

Whenever investors' appetite for risk wanes, they tend to seek safer, lower-yielding currencies such as the yen.

In wider market action in Asia, China's Shanghai Composite plunged 5.8%, Hong Kong's Hang Seng Index dropped 3.6%, Australia's S&P/ASX 200 dipped 1.6%, South Korea's Kospi shed 2.8% and India's Sensex gave up 3.1% in late Mumbai trading.