The Nikkei index at the Tokyo Stock Exchange fell 254.64 points to a five week low of 8,500.80. The Topix index of all first section shares fell 2.55 percent or 19.10 points to 730.30. The surging yields brought back into focus the prospect that Europe's problems could tip the global economy into a double-dip recession amid concerns that Italy is too big to be bailed out and a clouded future for the euro. Even though Prime Minister Silvio Berlusconi has pledged to resign once credible economic reforms are in place, markets remained spooked. "Selling isn't massive, but there are few buyers," said Tsuyoshi Segawa, equity strategist at Mizuho Securities. "Aside from rising Italian bond yields, concerns are growing that the single currency euro may collapse," he said. The already weak euro saw volatile trade in the mid $1.3500 and low 105.00 yen levels on Thursday. The dollar was flat at 77.78 yen. The rise of Italian government bond yields drove down US stocks overnight. On Wall Street, the eurozone worries pushed the Dow Jones Industrial Average down 3.20 percent. The broad-based S&P 500 lost 3.67 percent, while the tech-heavy Nasdaq Composite tumbled 3.88 percent. Pressure on scandal-hit optical equipment maker Olympus intensified Thursday as its shares fell 17.12 percent on delisting concerns and uncertainty over the extent of its investment losses. Olympus shares closed at 484 yen at their daily limit-down level. Selling pressure on the Tokyo bourse also increased after official data showed Japan's machinery orders for September fell 8.2 percent from the previous month, worse than the market's expectation for a 7.1 percent fall. Exporters, banks and other major shares took a hit. Toyota Motor fell 1.69 percent to 2,499 yen, while Sony plunged 4.68 percent to 1,322. Mitsubishi UFJ Financial Group dropped 2.66 percent to 329.