Insurance stocks worldwide have fallen in response to a tsunami and earthquake in Japan measuring 8.9 on the Richter scale.
Shares in large insurers such as Munich Re fell in anticipation of big payouts to cover the cost of the disaster.
Asian and European stock markets also fell, and the dollar briefly gained about 0.5% against the yen to 83.275 yen, before snapping back again.
The quake struck only minutes before the 0645 GMT close of trading in Tokyo.
The Nikkei ended the day down 1.7%, and Nikkei futures fell 3% in after-hours trading in Singapore. Markets in the UK, France and Germany were also down.
In Frankfurt, insurers Munich Re fell by 5.3%, while Allianz fell by 1.7%. Swiss Re and Hannover Re were also down by more than 4%.
In London, insurers Admiral, RSA and Prudential were down by 2.4%, 1.9%, and 1.7% respectively.
Munich Re has already said it would have to pay out about $1bn because of the Christchurch earthquake in New Zealand on 22 February.
The Tokyo market had already been suffering amid the turmoil in the Middle East, and closed at its lowest level in five weeks.
Across Asia other markets also fell.
Hong Kong’s Hang Seng dropped some 1.8% following the earthquake, and ended the day down 1.6%. The Shanghai composite fell by 0.8%.
At midday in London, the German Dax and French Cac were both down by more than 1%, while in London the Ftse was down by 0.4%.
Damage to economy
David Cohen, a Singapore-based analyst at regional economic commentators Action Economics said although the yen had traditionally been “a safe haven for investors” during disasters in other parts of the world, they may now ditch the yen in favour of the US dollar.
However, Arjuna Mahendaran, chief Asia strategist of HSBC Private Bank in Singapore, played down the risk of any long-term impact on the currency.
“Japan’s big insurance companies and pension funds have been bringing funds back into Japan,” he said. “And that has kept the currency strong. I think if the damage is too big, we could see them further liquidate their foreign assets and bring funds back to Japan.”
On the other hand, the quake is likely to hurt an already weak economy.
“In the short term, the damage could even knock off almost 1% of the country’s GDP,” noted Mr Cohen.
“Longer-term though, it will balance
out, through the rebuilding exercise which will be positive for growth will all the construction taking place. It could turn positive in about 12 months.”
There will also be concerns about damage to productive capacity, Mr Cohen said, and industrial production may suffer as a consequence of the damage caused.
Electronics giant Sony has six factories – four in Miyagi and two in Fukushima – in the north-east of the country, the region which suffered the brunt of the quake.
“Production in all factories has been halted for now,” said Sue Tanaka, of the firm’s communications department.
“The company does not know how long it will take to restart operations. It depends on the extent of the damage that has been caused. We are still awaiting an update on what kind of devastation has taken place.”
The factories mainly produce components for use in things like Blu-ray players, and all employees have been safely evacuated.
Toyota Motors said it had set up a company-wide emergency taskforce, but that all of its plants had restarted production.
However, employees at sister company Toyota Motor Tohoku in the north-east Tohoku region had been evacuated “to safe areas”.
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Japan earthquake causes fall in insurance shares