Corporate giants such as Toyota and Sony were again hit by heavy selling as they have been forced to halt production across Japan while nuclear plant operator TEPCO was set to post more huge losses after Monday's 24 percent dive.

The Nikkei index slumped below the 9,000 level as shares dived 9.94 percent, or 955.94 points to 8,664.55 a day after their lowest close in more than two years.

With a death toll expected to exceed 10,000, the horrific impact of Japan's biggest earthquake continued to emerge.

In an address to the nation, Prime Minister Naoto Kan said a fire broke out at the number-four reactor at a quake-hit atomic power plant and radiation levels there had risen considerably. The government said it posed a threat to health.

In an effort to soothe markets, the Bank of Japan pumped another five trillion yen into the financial system, which has been battered by Japan's biggest ever earthquake, a devastating tsunami and the escalating nuclear emergency.

"There is no sense of calmness to examine the health of the Japanese economy as a whole," Masayoshi Yano, senior market analyst at Meiwa Securities, told Dow Jones Newswires. Analysts put support for the index around 8,800 points.

Shares of plant operator Tokyo Electric Power again faced huge pressure Tuesday with engineers now racing to avoid meltdowns in four reactors.

TEPCO dived almost 24 percent on Monday and remained unquoted with a glut of sellers set to force it even lower Tuesday.

Before the market opened, the Nuclear and Industrial Safety Agency said another explosion was heard at the number two reactor at the troubled Fukushima Number One plant.

Authorities said the explosion inside part of the reactor appears to have caused damage and some staff have been evacuated from the facility.

Economists say it is still too early to assess the cost of the destruction from the record 9.0-magnitude quake and the 10-metre wall of water that laid waste to swathes of the northeastern coast and triggered an atomic emergency.

The quake and tsunami have damaged or closed down ports, although airports such as Tokyo's Narita have reopened. Transport infrastructure such as train lines and roads have been crippled along parts of the northeast.

Japan's top companies have halted production. Toyota was off 4.68 percent at 3,155 yen while Nissan fell 4.98 percent to 686 and Honda was down 4.39 percent at 2,959.

Sony dived 5.45 percent to 2,411.

The move by the BoJ to pump five trillion yen ($61 billion) came after the central bank said Monday it would inject a record 15 trillion yen to help stabilise the short term-money market, making good on an earlier pledge that it would unleash "massive" funds following the disasters.

The BoJ also said it will double a five trillion yen asset purchase scheme to help buffer the economy from the shock of the catastrophes, and left its key rate at between zero and 0.1 percent.

The central bank's priority is to ensure that financial institutions in disaster-hit regions do not run out of funds. Over the weekend it provided them with 55 billion yen to ease the pressure before Monday's move.

The government expects a "considerable" economic impact from the huge earthquake and devastating tsunami that plunged the nation into what Prime Minister Naoto Kan called its worst crisis since World War II.

A mammoth rebuilding task will be required in the aftermath of a disaster whose economic impact is widely expected to be at least as bad as that from the 1995 Kobe earthquake which killed 6,400 people.

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