Japanese shares nose-dived more than 10 per cent in morning trade on Friday as panicked investors dumped stocks following massive overnight losses on Wall Street and on growing fears over a global recession.
The benchmark Nikkei 225 index lost 974.12 points, or 10.64 per cent, to close the morning session at 8,183.37. At one point Japan's key index was down 11.4 per cent. The massive sell-off in Tokyo came after the Dow Jones industrial average Thursday dropped 679 points, or 7.3 per cent, to close below the 9,000-line for the first time in five years.
"We are seeing a meltdown in the world stock market due to growing fears over a global recession," said Kazuhiro Takahashi, general manager at Daiwa Securities SMBC Co. Ltd. Japan's broader Topix index also lost more than 8 per cent to close at 829.91 in early trade.
"Selling is unstoppable in New York and Tokyo. Investors were gripped by fear," said Yutaka Miura, senior strategist at Shinko Securities Co. Ltd. "They were worried about a severe slump in the global economy."
The Dow's 2,271-point tumble over the last seven sessions is its steepest seven-day point drop ever. Its seven-day per centage decline of 20.9 per cent is the largest since the seven-day plunge ending Oct. 26, 1987, when the Dow lost 23.8 per cent. That sell-off included Black Monday, the Oct. 19, 1987 market crash that saw the Dow fall nearly 23 per cent in a single day.
The Dow has lost 5,585 points, or 39.4 per cent, since closing at 14,164.53 on Oct. 9, 2007. It's the worst run for the Dow since the nearly two-year bear market that ended in December 1974 when the Dow lost 45 per cent.
Miura said the ongoing meltdown in global financial markets showed "confusion and uncertainty" among investors worldwide. The sell-offs came as finance ministers and central bankers from the Group of Seven industrialized nations prepared to meet Friday. "Investors are not so sure that the G7 will announce effective measures to contain the global financial crisis," Miura said.