EU Official Warns of Possible Catastrophe in Japan, Spooks Markets

A European Union energy official said Wednesday the crisis at the troubled Japanese nuclear plant appears to be spiraling out of control and catastrophic events may be imminent, helping to send already-jittery financial markets tumbling.

According to Dow Jones Newswires, Guenther Oettinger, the EU energy commissioner, said the situation at the Fukushima Daiichi nuclear facility has intensified and catastrophic events are possible in the next hours.

“The site is effectively out of control," Oettinger said, according to Dow Jones. "In the coming hours there could be further catastrophic events which could pose a threat to the lives of people on the island."

Oettinger made the comments to a European Parliament committee, but it’s not clear what he was basing his prediction on. Oettinger’s spokeswoman told Reuters he doesn’t have any specific extra information on the situation in Japan.

Even though the dire warning may not have been due to any new developments, it was more than enough to spook the markets.

The Dow Jones Industrial Average plunged 155 points in less than 15 minutes to as low as 11660.83. The benchmark index quickly recovered a portion of that ground, recently trading down by roughly 130 points. The Nikkei 225 futures tumbled more than 4%.

The world has been closely monitoring developments in Japan in the wake of last Friday’s magnitude 9.0 earthquake that has caused thousands of deaths and triggered a massive tsunami.

The disaster has also sent the Fukishima nuclear facility spiraling into perhaps the most serious nuclear crisis since the Chernobyl disaster. More fires broke out at the crippled facility on Wednesday and low levels of radiation have spewed into the air.

The situation has forced the evacuation of about 140,000 people who live near Fukushima, whose reactors were designed by General Electric (NYSE:GE).

Slammed by the crisis in Japan, $620 billion evaporated from the Japanese market during the first two days of this week. However, the Nikkei bounced back some on Wednesday, rallying nearly 6%.