"While conditions in the Middle East still need to be watched, we don't need to be overly pessimistic about the current selling," Monex market analyst Toshiyuki Kanayama told Dow Jones Newswires.US stocks plummeted Tuesday as warnings by Libya's embattled leader Moamer Kadhafi that he would fight to the end threatened to plunge the major oil exporter into chaos.

Kadhafi, in a rambling televised speech, threatened to "slaughter" opponents, saying he would fight to the "last drop" of his blood.The trouble in Libya comes after the rulers of Tunisia and Egypt were deposed by a popular uprising, while other leaders in the region including Iran, Yemen and Bahrain are also facing protests. The Dow Jones Industrial Average closed down 1.44 percent at 12,212.79, while the broader S&P 500 plunged 2.05 percent to 1,315.44.The possibility of Libya's oil production of around 1.8 million barrels a day being cut most of it destined for European markets sent crude prices sharply upward.

Brent North Sea crude for delivery in April rose 22 cents to $106 per barrel in Asian trade and New York's main contract, light sweet crude for April, rose four cents to $95.46.However, Saudi Arabia and other members of the OPEC oil cartel did say that they were prepared to meet any shortage of supplies.Toyota Motor fell 0.65 percent to 3,780 yen and Canon was down 0.87 percent at 3,975 yen.Mitsubishi Estate gained 1.74 percent to 1,691 yen and Mitsui Fudosan was up 0.46 percent at 1,745 yen.