Tokyo stocks nosedived Wednesday, with the key Nikkei index plunging more than 9 percent to a level unseen in more than five years on panic selling amid escalating fears over the global financial crisis.

"It's capitulation," said Masafumi Oshiden, a Tokyo-based fund manager at BlackRock Inc., which oversees more than $1.4 trillion. "There are lots of forced sellers. If you're a fund that's going bust, you need to close out all your positions."

The 225-issue Nikkei stock average plunged 9.38 percent, or 952.58 points, to post its third-biggest one-day drop on record, ending Wednesday at 9,203.32, its lowest close since June 30, 2003, when it finished at 9,083.11. It briefly declined to the 9,100 level at one stage.