Tokyo stocks plunge more than 3% in afternoon trade

Tokyo stocks plunged more than three percent in afternoon trading on Wednesday, as fears of a global recession hammered investor confidence ahead of testimony by the head of the US central bank.

The benchmark Nikkei 225 index tumbled 3.42 percent, or 550.74 points, to 15,534.70, after an eye-watering 5.4 percent dive the previous day.

The broader Topix index of all first-section shares fell 3.64 percent, or 47.52 points, to 1,256.81.

The fall came the day after the Nikkei's posted its steepest one-day fall in percentage terms since June 2013.

"We'll continue to see volatility," Chihiro Ohta, general manager of investment information at SMBC Nikko Securities, told Bloomberg News.

"The market is waiting to see what (US Federal Reserve Chair Janet) Yellen will say in her testimony on rate hikes, given the situation we're in."

Yellen appears before the US Congress on Wednesday.

Markets will be parsing her commentary for clues on when the US will raise rates again, amid concerns over the creditworthiness of European banks, a slump in oil prices and the strength of the global economy.

US stocks swayed between gains and losses all day on Tuesday as investors balked at the Nikkei's hammering and as oil prices dived below $28 a barrel.

"Having a large impact on the drop in equities is this growing concern about the sustainability of the recovery, the state of economic growth in China and, increasingly, the state of growth in the US," Russ Koesterich, global chief investment strategist for New York-based BlackRock, told Bloomberg News.

"People are getting worried about the global recession, worried about growth, which is affecting not only oil and stocks but other risky assets as well."

In forex markets, the dollar fell to 114.37 yen from 115.14 yen Tuesday in New York.

The euro stood at $1.1293 and 129.11 yen compared with $1.1293 and 130.04 yen in US trade.

Asahi Group, parent of Asahi Breweries, fell 7.66 percent to 3,347.0 yen by the mid-day break, after the Nikkei business daily reported it was offering $3.5 billion to purchase two European brands from SABMiller in what would be the biggest-ever overseas acquisition by a Japanese beer company.

In afternoon trading, the stronger yen hit some firms that have major overseas operations, with Sony down 2.64 percent to 2,325.5 yen and mobile carrier SoftBank tumbling 5.12 percent to 4,519 yen.

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