Japan supply chain fears rattle world stock markets
Top winner and loser
Stock markets have fallen sharply on fears Japan's earthquake may disrupt global manufacturers' supply chains.
On Wall Street, the Dow Jones finished the trading day 1.15% lower, while in Frankfurt the Dax was down 3.2%, led by tech firms and carmakers that rely on Japanese suppliers for crucial parts.
Companies linked to the nuclear energy industry were also badly hurt.
Earlier on Tuesday, the Japanese market plunged again on fears of a meltdown at the Fukushima Daiichi nuclear plant.
There have been reports of a fire and another explosion at the plant.
Japan was hit by a massive earthquake and tsunami on Friday, causing billions of dollars of damage.
The Nikkei 225 shed 10.6% on Tuesday to 8,605. At one point, it was down 14, registering its biggest two-day drop in 40 years. The broader Topix index fell 9.5%.
Chips supplies down
Many companies have shut down production in Japan in order to conserve energy usage and minimise the impact of electricity shortages on households.
The country is already subject to planned blackouts after electricity supply and distribution were shattered by the magnitude 9 earthquake and tsunami.
Those shutdowns now threaten to disrupt manufacturing elsewhere in the world.
Japan is a dominant player in the microchip market, supplying about 20% of global semiconductors and 40% of flash memory chips.
"While there are few reports of actual damage at electronic facilities, impacts on the transportation and power infrastructure will result in disruptions of supply, resulting in short supply and rising prices," said research firm IHS iSuppli.
On Monday, non-Japanese carmakers outperformed the broader market, as they were expected to gain market share at the expense of their crisis-struck Japanese peers.
However, it is becoming evident that many international car manufacturers depend on Japan for parts supplies, particularly electronic components and batteries for hybrid vehicles.
BMW and Volvo have both said they are still investigating the impact on production.
"We have international supplier networks, not just BMW, but other automakers too," said BMW chief executive Norbert Reithofer.
His head of purchasing said there were currently no effects on production, but the company would only be able to say in seven to 10 days what the likely longer-term effect might be.
Japanese car companies have shut down their domestic production facilities for several days.
Nissan and Honda both told the BBC they were using the time to assess the impact on the parts producers on whom they depend.
"Frankly, it's extraordinarily complex," said Andy Palmer, senior vice president at Nissan.
"We're assessing supplier by supplier what the supply chain is looking like," he added, noting that some suppliers are located within an exclusion zone around the Fukushima nuclear plant.
Events in Japan are also having a pronounced effect on energy markets.
Companies associated with the nuclear power industry have seen sharp falls in their share prices.
German utilities E.On and RWE fell in late afternoon trading, as Chancellor Angela Merkel said she was temporarily closing seven reactors and reviewing the country's nuclear energy strategy in response to the crisis at Fukushima.
Some uranium miners also saw double-digit plunges in their share prices.
The German move also helped push the price of carbon emissions permits in Europe to its highest level since November 2008, as the country substituted coal-fired power for nuclear generation.
The price of liquefied natural gas (LNG) also rose for the second consecutive day.
Japan is a major buyer of LNG, and is expected to increase imports to support gas-fired generators and compensate for lost nuclear power capacity.
Weak Japanese spending and possible disruption of global manufacturing also pushed metals prices down on Tuesday, leading to a slump in mining stocks on the London Stock Exchange.
Concerns about the impact of the devastation on Japan's economy have been rising as the extent of devastation becomes clear.
The blasts at the nuclear plant and the threat of a radiation leak have further escalated those fears.
A nuclear disaster would make the task of rebuilding and reconstruction far more difficult and costly.
According to some estimates, the devastation caused by Friday's deadly earthquake and subsequent tsunami is expected to cost Japan $180bn (£111bn) in reconstruction and recovery.
At the same time, analysts have forecast that the quake could knock as much as one percentage point off Japan's gross domestic product.