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Shares in Japan dropped sharply on Friday after the central bank published a survey indicating rising gloom among Japan’s corporations. Other markets in Asia plunged as well.

Japan’s Nikkei 225 Stock Average slumped 3.6 percent to 16,164.16, while South Korea’s Kospi declined 1.1 percent to 1,973.57. Shanghai Composite Index in mainland China slipped 0.3 percent to 2,994.77, and Hong Kong’s Hang Seng index sank 1.2 percent to 20,523.47.

According to a market analyst, “The Nikkei did not handle the release well almost losing over 3 percent today, which could indeed be seen as a nasty posttension for global equities heading into U.S. earnings season.”

The Bank of Japan’s index for huge manufacturers slid to 6 in March, down from December 12. Japan’s huge exporters have been affected by a double blow of a plunging Chinese economy and an increasing yen.

An analyst noted, “Its important for policymakers to develop new policy means and use them appropriately as needed. Monetary policy steps should not be deployed recklessly. Policy decisions must be made calmly and cautiously.”

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The index measures the percentage of responding firms that say business conditions are better minus the percentage that say they are worse. So an index level of 6 means slightly more firms are positive than negative.

Meanwhile, European stock markets sank sharply during early trading on Friday after a round of bumper losses across Asia.

Japan stocks shed more than 3 percent to lead losses across Asian stock markets on Friday after a focused survey indicated confidence at Japan’s top manufacturers has dipped to a three year low.

An unexpected clime in a measure of Chinese manufacturing was unable to arrest the slumps, with market players bumped by news that Standard & Poor’s had decreased its credit rating outlook on China to negative territory.

At the open, London’s benchmark Financial Times Stock Exchange 100 index stumbled 1.1 percent at 6,104.12 points. In the euro zone, Germany’s DAX 30 index slipped 1.3 percent to 9,833.26, while France’s CAC 40 declined 1.2 percent to 4,331.28 points compared to 4,331.28 points versus Thursday’s closing levels.

Last month, the European Central Bank released a bold easing package in its most recent attempt to stimulate growth and drive up inflation, which at negative 0.1 percent (-0.1%) in March was nowhere its 2 percent target, but it does not seem to be working yet.

As stated by a chief economist, “The data suggest manufacturing grew by only around 0.2 percent in the first quarter. Policymakers will also be worried by the further intensification of deflationary pressures in manufacturing supply chains. Discounting was widespread as firms competed on price amid weak demand.”

Despite the price cutting and European Central Bank spurs, Markit’s manufacturing purchasing managers’ index for the euro zone only gained to 51.6 from February’s year low of 51.2.