Japanese shares dropped more than 4 percent in early trade Wednesday as jittery investors dumped stocks in line with a plunge on Wall Street and deepening uncertainty over the course of the financial crisis.
The benchmark Nikkei 225 index lost 460.78 points, or 4.54 percent, to close at 9,695.12 in the morning session.
The broader Topix index also dropped 4.32 percent to 935.40 in early trade.
Massive selling in Tokyo followed a plunge on Wall Street on Tuesday. The Dow lost more than 500 points to finish at 9,447.11, the lowest close in five years. The Japanese key index also tumbled more than 3 percent Tuesday to close at the lowest level in almost five years.
"Amid deepening uncertainty over the course of the financial crisis and worries over a slowdown in the global economy, investors simply don't find incentives to buy stocks," said Kabuki Miyazawa, market analyst at Daiwa Securities SMBC Co. Ltd.
"Selling seems almost unstoppable because of uncertainty over the crisis," he said.
In New York on Tuesday, the Dow lost more than 5 percent despite steps by the Federal Reserve to reinvigorate the dormant credit markets.
Federal Reserve Chairman Ben Bernanke warned in a speech Tuesday that the financial crisis could prolong the difficulty the economy is facing. While his remarks were widely regarded as a sign that an interest rate cut could be in the offing, Wall Street appeared little comforted and focused on his downbeat assessment.
