March 19 (Reuters) - Japan's share benchmark Nikkei fell to a 3-1/2-year low on Thursday, reversing early gains as panic selling over the coronavirus pandemic overshadowed a massive shot of stimulus from the world's major central banks.
The Nikkei average rose as much as 2.6% at one point but closed down 1.04% at 16,552.83, its lowest close since November 2016. It has fallen about 30% in the past four weeks.
The Nikkei's volatility index, a measure of investors' volatility expectations based on option pricing and considered to be a fear gauge, rose 4.2% to 58.45, not far from Monday's nine-year peak of 60.86.
Traders said it appeared some global investors have rushed to liquidate their holdings for fear of potential market closures due to the virus crisis.
"A series of steps the world's central banks have quickly taken have so far been ineffective in turning around investor sentiment," said Masanari Takada, cross-asset strategist at Nomura Securities.
The Nikkei's SoftBank Group Corp tumbled 17.2% and was the heaviest-traded individual share on the main board, hammered by investor scepticism over the outlook for tech bets, such as office sharing firm WeWork and ridehailer Uber.
The tech conglomerate's shares lost 10.9% on Wednesday to take its market cap below that of mobile phone unit SoftBank Corp for the first time.
The most notable mover was the TSE REIT index, which nosedived 16.8%, its largest ever one-day percentage drop, to hit a seven-year trough of 1169.96.
Some analysts attributed the plunge to selling by leveraged investors, while others put the fall down to selling by regional banks' selling ahead of the fiscal year-end on March 31.
The broader Topix continued to outperform the Nikkei, finishing up 0.97% at 1,283.22. But it also gave up gains from earlier in the session, having risen more than 3% after the ECB unveiled its 750 billion euro ($820 billion) asset-purchase programme.
Market players said hopes the Bank of Japan and public pension funds such as the Government Pension Investment fund would step in to bolster share prices had helped support the market.
The dollar rose versus the yen to a three-week high, also providing a tailwind for the broader market. A weaker yen boosts corporate profits when they are repatriated.
Unizo Holdings soared 11.8% as the hotel chain said top shareholders Elliott Management and Ichigo Asset Management have agreed to tender their shares to Lone Star after the U.S. fund raised its bid to 6,000 yen per share.
Elsewhere, Fujifilm Holdings Corp shed 8.5% after it said it expects no direct earnings impact from potential sales growth of Favipiravir in China for now as its license for the key ingredient in the country already expired last year.
On Wednesday, Fujifilm's shares surged by a daily limit of 15.4% after a Chinese official said an active ingredient of the company's Avigan anti-flu drug appeared to help coronavirus patients recover.
The turnover at the Tokyo Stock Exchange's main board hit 4.685 trillion yen ($43 billion), the second highest this year after last Friday.
$1 = 0.9149 euros $1 = 109.0500 yen Reporting by Tomo Uetake; Editing by Himani Sarkar and Richard Pullin