Japan's Topix Index slumped to its lowest level in 28 years as investor confidence was severely hit by disappointing U.S. jobs data, the increasing euro zone debt crisis and the weakening Chinese economy. 

The Topix Index fell 1.9 percent to close at 695.51, which is the lowest level it's measured since December 1983. The market, which was feeling the effects of turmoil in Europe, a slowdown in China, and a stagnant U.S. economy, appeared to be in need of immediate measures from policy makers to turn matters around.

The general outlook was negative as investor sentiment was dampened by disappointing U.S. economic data. The markets were dragged down as non-farm payrolls showed that the U.S. economy added 69,000 jobs in May, which was much below the expected 150,000 jobs. A report on U.S. employment in May clearly suggests that labor market conditions are deteriorating.

Investor responses were negative due to rising concerns about the euro zone as pressure increases on the Spanish government to ask for a proper bailout of its banks from the European Central Bank. Potentially large fiscal risks have been created from Spanish banks' exposure to the ailing property and construction sectors.

This follows the situation developing in the Spanish banking sector after Bankia, the country's fourth-largest bank, asked for a 19 billion euro ($23.8 billion) capital injection. The source of concern for the market is how this capital injection will be dealt with. Officials have hinted at direct public help, which could ultimately be more of a burden for the country's economy and the region due to any austerity meastures that may accompany such direct aid. .

Another factor that pushed the market down was the report that China's non-manufacturing sector grew at a slower pace in May compared to the previous month, raising concerns about a possible slowdown in the country's economic growth. The data released by the China Federation of Logistics and Purchasing Sunday showed that the country's Purchasing Managers' Index declined to 55.2 in May from 56.1 in April.

It does appear that the global slowdown and events in Europe and the U.S. are beginning to have a more marked impact on the Japanese economy.