SYDNEY - Japanese shares tumbled on Thursday, with major indexes at three-year lows after the United States rattled markets by imposing sweeping restrictions on travel from Europe and world health officials declared the coronavirus a pandemic.

The benchmark Nikkei average slumped 4.4% to 18,559.63, its lowest closing level since April 2017. The fall was the second-biggest one-day decline in 15 months and dragged the index into bear market territory - 23% off its Jan. 17 peak.

The Nikkei's volatility index, a measure of investors' volatility expectations based on option pricing, jumped more than 10% to 52.09, its highest since March 2011 when massive earthquakes and a tsunami struck Japan.

The Nikkei slid further below the estimated average cost of the Bank of Japan's stock purchases around 19,500, raising concerns about the central bank's credibility and the sustainability of its hyper-easy monetary policy. 

The World Health Organization described the new coronavirus as a pandemic for the first time on Wednesday, adding that Italy and Iran were now on the frontline of the disease and other countries would soon join them.

U.S. President Donald Trump said Washington will suspend most travel from Europe, except from the United Kingdom, to the United States for 30 days starting on Friday.

He also announced some other steps, including instructing the Treasury Department to defer tax payments for entities hit by the virus.

But investors were hardly convinced those measures will turn around the global economy as concerns grew that the number of infections could quickly snowball in many countries.

"I think markets are sending a clear signal to the White House that the measures announced today were too little too late," said Mick McCarthy, chief strategist at CMC Markets in Sydney.

The broader Topix plummeted 4.1% to 1,327.88, its lowest closing since November 2016, sinking deeper into a bear market.

All of the 33 sector sub-indexes on the Tokyo Stock Exchange traded lower, with sea transport, air transport and mining being the worst three performing sectors.

"Investors just want to pull out funds from every risk asset. It doesn't matter whether shares are defensive or which sector they belong to," said Yasuo Sakuma, chief investment officer at Libra Investments in Tokyo.

"Looking at bank and real estate shares, there appear to be worries this could lead to a financial crisis."

Mitsubishi UFJ Financial Group Inc , Sumitomo Mitsui Financial Group Inc and Mitsubishi Estate Co Ltd 8802 shed 5.5% each, while the TSE REIT index plunged 6.5%.

Among other major names, Toyota Motor Corp dropped 3.5%, SoftBank Group Corp 9984.T lost 6.3% and Sony Corp declined 4.3%.

Elsewhere, the index of Mothers start-up shares plunged 5.4% to a seven-year trough.

(Reporting by Tomo Uetake; Additional reporting by Alun John; Editing by Shri Navaratnam and Lincoln Feast.) ((tomo.uetake@thomsonreuters.com; +61 2 8587 7000))