TOKYO (AFP) - Tokyo stocks plunged more than six per cent on Thursday owing to a strong yen and worries about an end to central bank stimulus just months after the Bank of Japan unleashed a huge spending plan.
The benchmark Nikkei dived 6.35 per cent, or 843.94 points, to 12,445.38, slicing about 20 per cent off its peak last month above 15,600, and meeting the definition of a bear market.
The broader Topix index of all first-section shares fell 4.78 per cent, or 52.37 points, to 1,044.17.
Thursday's drop was largely attributed to jitters over an end to central bank stimulus, particularly the US Federal Reserve's massive monetary easing, which has been credited with propping up global equity markets.
However, cracks have also begun to emerge in a plan by Japanese Prime Minister Shinzo Abe to power the world's third-largest economy, a blueprint dubbed "Abenomics".
Last week, investors turned up their noses at what some saw as a half-hearted bid to force structural reforms in the long tepid economy, the so-called "third arrow" of Abe's plan.
Foreign investors had piled into the market since late last year as the government and Bank of Japan set about a policy prescription of big spending and aggressive monetary easing, which pushed down the yen.
A weaker yen benefits Japanese exporters by making them more competitive overseas and tends to push up Tokyo stocks.
However, investors were sent running after the central bank said it would hold off any new easing measures on Tuesday, a day after data showed the economy was growing faster than expected.