Japanese stocks have taken the steepest dive since the Fukushima nuclear disaster in 2011. Analysts put the tumble down to a drop in Chinese business confidence and a strengthening of the yen.
Japanese shares fell 7.32 percent on Thursday, with the benchmark Nikkei 225 Stock Average losing well over 1,000 points.
Analysts blamed the marked dive on an unexpectedly weak index of purchasing managers' sentiment in China, published by HSBC Holdings. They added Japanese stocks were also hurt by a strengthening of the national currency, making exports more expensive overseas and eroding repatriated earnings.
The broader-based Topix stock index was also down almost 7 percent, losing close to 90 points.
Japan's plummeting stocks also had an impact on the German blue-chip DAX index which lost about 2 percent in early trading on Thursday. It had logged a new all-time high a day earlier at 8530.89 points at the Frankfurt Stock Exchange.
Banking stocks were among those most affected by the tumble, with Deutsche Bank shares dipping by 3.6 percent in the morning just an hour before the lender's annual shareholder meeting.
hg/jr (dpa, AP, Reuters)