Tokyo stocks slumped 2.3% on Tuesday amid lingering scepticism over the effectiveness of a series of key bank reforms now passing through parliament.

Investors also took profits after Monday's 5.2% rally, which was driven by the enactment of reform bills aimed at helping failing banks with injections of taxpayers' money.

The lower house on Tuesday passed another bill, which will prop up weak but solvent banks with public funds in a 60 trillion yen ($510bn) bailout package.

"It is still not clear how effectively banks will use the public funds," a Universal Securities Co Ltd dealer said.

"Investors do not think that the credit crunch will be resolved as a result," he added.

The Nikkei 225 index fell 312.22 points to close at 13,242.79, reversing Monday's 675.04-point rebound from its near 13-year low.

The broader Topix index of all issues on the first section of the Tokyo Stock Exchange was also down 24.36 points at 998.98.

Turnover on the major board remained brisk, totalling an estimated 500m shares against the previous day's 570.8m shares.