Japan supply chain fears rattle world stock markets

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European stock markets have fallen sharply amid fears that Japan's earthquake may undermine supply chains for global manufacturers.

The German Dax index dropped 5%, led by tech companies and carmakers which rely on Japanese suppliers for crucial parts, before recovering somewhat.

Companies linked to the nuclear energy industry were also badly hurt.

Earlier on Tuesday, the Japanese market plunged again on fears of a meltdown at the Fukushima Daiichi nuclear plant.

There have been reports of a fire and another explosion at the plant.

Japan was hit by a massive earthquake and tsunami on Friday, causing billions of dollars of damage.

The Nikkei 225 shed 10.6% on Tuesday to 8,605, and had been down 14% at one point, registering its biggest two-day drop in 40 years. The broader Topix index fell 9.5%.

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