The Bank of Japan has injected a record ¥21.8 trillion (£165bn) into the Japanese economy to limit the financial devastation

The Bank of Japan has injected a record ¥21.8 trillion (£165bn) into the Japanese economy to limit the financial devastation wreaked by the earthquake, tsunami and nuclear power crisis.

The unprecedented intervention failed to prevent the country's main stock market index plunging by more than 6%, but is thought to have averted a steeper fall.

Tokyo's Nikkei index dragged down shares across the world as investors worried that a decline in the world's third biggest economy would reduce the value of goods and services the country bought from overseas.

The FTSE 100 index of leading British shares slumped by nearly 1% and its Europe-wide equivalent fell by 1.06%. In the US, the S&P 500 was down 1.15% in afternoon trading, while Germany's Dax and France's CAC 40 indices ended the day down 1.65% and 1.3% respectively.

Analysts said European shares would probably have fallen further, if Brussels had not agreed at the weekend to increase the eurozone's bailout fund from around ¤250bn (£216bn) to ¤440bn, making a repeat of the Irish and Greek meltdowns less likely.

As Japanese workers battled to prevent a nuclear meltdown and the unrest continued in the Middle East, the price of oil and gas increased amid concerns that Japan, a country heavily dependent on nuclear energy, may need to significantly step up its consumption of fossil fuels.

Japan typically gets about a third of its energy from nuclear power, which has seen its capacity reduced by more than a fifth by the country's worst earthquake and left 11 reactors out of action.