Japan shares sink into a bear market Thursday 09:05 BST. Japanese stocks fell into bear market territory and the yen rose to its strongest level against the US dollar since the Bank of Japan launched a huge package of measures to stimulate the economy. The rout in Tokyo, which spread across Asia, left European markets lower in early trading on Thursday and commodity prices weaker. Japan's Nikkei 225 index ended down 6.4 per cent and at its lowest point since April 3, the day before the Bank of Japan announced a new phase of monetary easing by promising to double the monetary base over two years. The broader Topix index fell 4.8 per cent. The unravelling also means the Nikkei is down 22 per cent from its peak in May, promoted by suggestions that the US Federal Reserve might start to "taper" its bond-buying programme. More than a 20 per cent fall is an official bear market. The volatility follows news on Tuesday that the Bank of Japan was keeping monetary policy where it was. Some investors had been expecting further easing measures in response to recent market volatility, and felt short changed when nothing emerged. Hedge funds in particular have since been cutting their long Japanese equity positions and short yen positions that they had built up over the past few months on concerns about central bankers taking their foot off the accelerator. The yen had a rough ride as well as a result, rising 2 per cent and breaking through Y94 against the dollar for the first time in two months. By the close of trading in Tokyo, the currency had crept back up to Y94.04. Southeast Asian markets were hit just as hard as the global sell-off in emerging markets continued. The Philippines market - one of the world's best performers last year - endured its worst day since late 2008, falling 6.8 per cent. Thailand, another star gainer last year, shed 4.5 per cent and is now in negative territory year to date. Foreign investors have been selling shares in both markets at a record pace so far this month. China joined the market and jumped on to the bandwagon after a three-day holiday. The CSI 300 dropped 3.3 per cent, while Hong Kong shares slipped 2.2 per cent. European markets were dragged lower by the selling, with the Eurofirst 300 index falling 0.7 per cent to 1,167.08. Germany's Dax index is down 1 per cent, while France's CAC 40 is down 0.5 per cent. Shun Maruyama, chief Japan equity strategist at BNP Paribas, said: "Japan is a developed country, but in equities it is like an emerging market - driven by get-in, get-out hot money. So hot money is getting out of emerging markets - including Japan. Mr Maruyama estimates that "between 80 and 90 per cent" of the $80bn that has come into Japanese stocks this year has been from such shorter-term investors. Mitul Kotecha, global currency strategist at Crédit Agricole, said: "The combination of elevated risk aversion and disappointment over recent policy announcements, in particular the lack of detail about Prime Minister Abe's third arrow, has prompted ever more upside for the yen." The commodity markets also took a knock, with Brent crude oil down 0.2 per cent to $103.24 a barrel and copper down 0.2 per cent to $321.780 a pound. Camilla Sutton, senior currency strategist at Scotia Bank, said: "Increasingly, monetary policy appears to have reached its limit in terms of stimulus. Accordingly, there appears to have been a rapid shift to de-lever, which has weighed heavily on emerging market currencies - particularly the most vulnerable to outflows and the carry trade. The Australian dollar is one of the advanced economies" victims of this shift." Additional reporting by Dave Shellock in London and Ben McLannahan in Tokyo