Japanese stocks fell more than 6 per cent today, marking their biggest daily loss in two years, and bond yields rose as investors expected the earthquake and tsunami that devastated the country's north-east to take an economic toll and require heavy government borrowing.

The drop in Tokyo-listed shares to their lowest since November was compounded by fears about the longer term impact on power supplies after the earthquake damaged a nuclear generator and authorities worked desperately to avert a plant meltdown after an explosion on Monday.

The yen also slid against the dollar after hedge funds unloaded the Japanese currency after the Bank of Japan announced a total of 15 trillion yen in fund injections to keep money markets stable.

The Japanese government bond yield curve steepened, with super-long debt retreating as market players anticipated the potential fiscal costs of future rebuilding efforts, even as short- to medium-term JGBs rallied.

Japanese automakers and, electronics firms and oil refiners saw their share prices drop by double digit percentages after having to shutter key factories after Friday's earthquake and tsunami, which are feared to have killed more than 10,000 people and severely damage infrastructure.