Japan shares plummet 6.2%

London: World stocks fell yesterday driven by a 6.2 per cent slide in Tokyo shares, while oil tumbled as concerns grew about the economic impact of Japan's devastating earthquake and tsunami.

The cost of insuring Japanese debt against default rose to 10-month highs of 91 bps in the five-year credit default swaps market according to Markit, and analysts are revising down their growth forecasts for the country.

"There will be a negative impact on GDP, though we have to take into account the positive impact of the rebooting demand, that could offset the negative impact in the third quarter," Takihide Kiuchi, Nomura's chief economist for Japan, told investors in a conference call.

Kiuchi added that Nomura was likely to revise down its first quarter GDP forecast for Japan by 0.5 percentage points to 0.7-0.8 per cent and slice 0.3-0.4 per cent off its 2011 growth forecast to 0.9-1.0 per cent.

US stock markets slid lower yesterday as investors grappled with the economic impact of Japan's massive earthquake and tsunami and unfolding crises at quake-stricken nuclear reactors.

The Dow Jones Industrial Average fell 57.90 points (0.48 per cent) to 11,986.50 and Nasdaq Composite dropped 8.89 points (0.33 per cent) to 2,706.72.

The S&P 500 index shed 6.64 points (0.51 per cent) at 1,297.64.

Wall Street stocks had proved resilient on Friday after the quake and massive tsunami struck Japan, the world's third-largest economy.

The MSCI world equity index fell to levels last seen in late January, before trimming losses to trade down 0.46 per cent at 1155 GMT.

Japan's benchmark Nikkei index fell 6.2 per cent to 9,620.49, having hit a four-month intraday low at one point. The broader Topix index slumped 7.5 per cent.

The yen reversed early gains after the Bank of Japan doubled its asset buying scheme to 10 trillion yen and supplied record funds to banks on Monday to shore up confidence.

US crude oil fell 1.5 per cent to $99.66 a barrel.

The dollar fell 0.1 per cent against a basket of major currencies while the yen rose 0.15 per cent to 81.78 per dollar. The euro rose to $1.3950.