TOKYO (Kyodo) -- The Nikkei stock index briefly plunged over 3 percent Friday morning, on losses in technology shares as concerns over massive investments in artificial intelligence resurfaced, while an escalation in the Middle East crisis also pressured the market.

The 225-issue Nikkei Stock Average fell 1,853.85 points, or 2.79 percent, from Thursday to 64,568.75. The broader Topix index was down 41.09 points, or 1.01 percent, at 4,012.79.

The U.S. dollar traded in the upper 163 yen line in Tokyo, as flight-to-safety demand lingered amid uncertainty in the Middle East, while the rise was slightly capped after Finance Minister Satsuki Katayama said Japan will take "decisive action resolutely" when needed.

At noon, the dollar fetched 163.76-78 yen compared with 163.80-90 yen in New York, after briefly rising to 163.99 yen, the highest since November 1986, and 163.31-32 yen in Tokyo at 5 p.m. Thursday.

The euro was quoted at $1.1381-1382 and 186.39-40 yen against $1.1372-1382 and 186.39-49 yen in New York and $1.1424-1425 and 186.57-61 yen in Tokyo late Thursday afternoon.

The Nikkei's plunge tracked overnight Wall Street losses after Google parent company Alphabet Inc. announced further investments in AI, provoking concerns over profitability despite robust earnings results, dealers said.

The escalation in the Middle East situation pushed up crude oil futures and interest rates after the Iran-aligned Houthis said they had attacked two Saudi Arabian tankers, while U.S. President Donald Trump reportedly said he was seriously considering further massive attacks on Iran.

"Selling most likely prevailed ahead of next week's earnings releases," said Maki Sawada, strategist in the Investment Content Department of Nomura Securities Co., citing Advantest Corp., Tokyo Electron Ltd., Kioxia Holdings Corp. and others.