Markets in Japan plunged this morning, posting some of their biggest one day losses in four years, as record oil prices at $100 per barrel and a weak US dollar compounded fears about a slump in global demand.

Japan's Nikkei 225 Stock Average fell 4 per cent to a 17-month low of 14,691.41 at the market close. The broader Topix index also tumbled over 4 per cent to 1,411.91, its worst ever performance.

The falls came as the head of the Tokyo Stock Exchange warned that Japan was losing its appeal to investors and urged the government and the private sector to tackle tough competition from rival bourses elsewhere in Asia.

“Our country is losing its attractiveness as a place of investment, while ’oil money’ and other huge excess funds flow around the world,” said TSE chief executive Atsushi Saito.

“We must draw up concrete action plans in order to increase our attractiveness as soon as possible.”

As he spoke, other Asian stock markets were advancing with Hong Kong's Hang Seng Index up 1 per cent, its best for four weeks, led by two of the big Chinese oil companies, PetroChina and Cnooc.

PetroChina surged 6.1 per cent to HK$14 while Cnooc rose 5.3 per cent to HK$13.82.

The Tokyo falls were led by Japanese electronics and car manufacturers, amid fears of weakening consumer demand in the US, the world’s largest economy.

Shares in Japan's third-largest carmaker Nissan fell the most in six years after industry figures yesterday showed Americans bought 16.1 million cars and light trucks last year, the lowest total since 1998.

Toyota, the world’s second largest car company after General Motors, fell 4.3 percent to 5,780 yen.

Sony also slipped 6.6 percent to 5,790 yen and Nintendo posted a 4.9 per cent fall to 63,600 yen.

The falls came as global oil prices continued their record run. In New York trading yesterday, crude prices rose to a fresh all-time high of $100.09, amid continued concerns about tight winter supplies in the US.

The US Energy Department said on Thursday that oil stocks fell 4 million barrels last week, more than the 1.7 million barrel decline expected by the market.

The strong yen, which was trading at 109.42 yen to the dollar earlier, hampers Japanese exporters by making their exports less competitive and cuts into the value of their overseas profits.

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