An early decline in Japanese shares picked up speed Tuesday afternoon, with the main index skidding 14.4% as the country's prime minister warned of a high risk of elevated levels of radiation from a reactor at the Fukushima nuclear-power plant after another explosion earlier in the day.
Bargain hunters were swept aside by the selling with the benchmark Nikkei Stock Average recently at 8257.56, its lowest level since April 2009 and at risk of further weakness as the Nikkei June futures contract continued to drop. The declines were exacerbated by news of a fire at Tokyo Electric Power's No. 4 reactor at the Fukushima Daiichi plant in northeastern Japan and reports that radiation has spiked near the No. 3 reactor. The market was quickly dropping toward key support at 8000 points.
"Substantial amounts of radiation are leaking in the area," Prime Minister Naoto Kan said on television. "We are making utmost efforts to prevent further explosions or the release of radioactive materials."
"All we can do now is just watch these developments at the nuclear power plants," said Yutaka Miura, a senior technical analyst at Mizuho Securities.
Selling turned indiscriminate with the market on course for its worst showing since Oct. 20, 1987, when it fell 14.9%. "It's panic-selling. It's not only foreign investors—everybody just wants to dump shares," said Retela Crea Securities general manager Yosuke Shimizu.
This is happening despite the 8 trillion yen the Bank of Japan has pumped into the Japanese economy over the past 24 hours.Futures trading will be suspended if the main contract falls to 7780 points; recently it was down 14% at 8160, having briefly fallen below 8000 for the first time since March 2009. The Osaka Securities Exchange triggered circuit breakers several times to temporarily halt trade.