Japan stocks plunged more than 3 per cent because of increasing concern for the U.S. housing market. Investors also worried for Japanese steelmakers stocks that are declining these days.

The 225-issue Nikkei Stock Average, which increased over 240 points on the previous day, declined 432.62 points, or 3.27 percent, to 12,782.80.

The broader Topix index of all First Section issues on the Tokyo Stock Exchange was decreased 39.78 points, or 3.09 percent, to 1,247.77. 

The TSE's Second Section index lost 42.71 points, or 1.47 percent, to 2,855.97 on a volume of 49.95 million shares.

Financial and real-estate markets primarily decreased after reports of a worsening U.S. credit markets.

Among all of TSE first section, 1,491 issues increased and 180 decreased. The trading volume reached 2,077.43 stocks or 2,353.2 billion yen. The Japanese currency is being traded in the level of 102 yen per 1 U.S. dollar.

Traders said investors are waiting for the U.S. employment report for February, and there is not many data that make investors buy or sell in Japan now.