Japan suffers biggest single-day stock drop for 20 years

Asia’s financial crisis deepened today after Japan’s Nikkei stock average fell almost 10% in its biggest single-day drop for more than 20 years.

The world’s second-biggest economy was also rocked by the collapse of an established life insurer: Yamato Life Insurance becomes the country’s first major victim of the US credit crunch.

The Nikkei, already reeling from a fall of almost 10% on Wednesday, shed 881 points, or 9.62%, to end the day at 8,276, its lowest close since May 2003.

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The index has fallen by an average of 24% this week, more than double the weekly losses seen in the aftermath of the 1987 stock market crash. The Nikkei has lost 46% this year and nearly a quarter of its value since last Friday.

“Selling is unstoppable in New York and Tokyo,” Yutaka Miura, a senior strategist at Shinko Securities, told the Associated Press. “Investors were gripped by fear.”

On the final day of the Nikkei’s worst week in history, yet another orgy of selling was sparked by an overnight drop of 7.3% on the Dow Jones industrial average and news that Yamato, a 98-year-old life insurance firm, had become Japan’s first major financial firm to collapse as a result of the US credit crisis.

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