Japan stocks plunged over 3 percent Thursday, marking their lowest levels since August 2005 as the yen increased and fears of U.S. recession.

The 225-issue Nikkei Stock Average lost 427.69 points, or 3.33 percent, from the previous day to 12,433.44.

The broader TOPIX index decreased 39.26 points, or 3.13 percent, to 1,215.87, which also marked the lowest level since Aug. 9, 2005 when it closed at 1,206.27.

Among all the issues of TSE first section, 175 increased and 1,492 decreased. The trading volume reached 2,164.4 million stocks or 2,393.8 million yen. The Japanese currency was being traded in the first half of 100 yen per 1 U.S. dollar.

Almost all the issues of TSE first section were decreased affected by the selloff trend of Asian stock markets. Among them, especially real estate and financial group issues were sharply sold because of surging fears of U.S. economy. Also export oriented issues like Canon and Honda plunged because of strong yen.

Traders said investors doubt the effectiveness of a joint liquidity-boosting measure by the U.S. Federal Reserve and other central banks to avoid financial turmoil caused by U.S. subprime mortgage meltdown. It will take time to overcome current financial turmoil. The bad circle is coming out that if yen becomes strong, the Japan stocks are sold and also if Japan stocks are sold, yen becomes strong.