Equity markets across the world fell sharply on Tuesday as investors took fright at the threat of nuclear meltdown in Japan and the biggest two-day sell-off in the country’s Nikkei index for 24 years.

Investors showed their anxiety by indiscriminately selling riskier assets and moving into perceived havens such as US and German government debt. Japanese equities fell 10.6 per cent, their third-worst drop in history, while German shares dropped more than 5 per cent at one stage.

“The stock market has been remarkably resilient over the past two years. So have the US and global economies?.?.?.?and the US consumer. However, all of them may be about to face their greatest challenge as Japan’s disaster may be turning into an unmitigated catastrophe,” said Ed Yardeni, founder of Yardeni Research.