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Global insurers girded for new hits on their balance sheets as they began assessing the massive Japanese earthquake, less than three weeks after a deadly and costly quake in New Zealand.

Stocks in European re-insurance companies plunged Friday in the hours after Japan's quake, which launched a damaging tsunami, left hundreds dead , and sparked fires, shut down factories, and seriously damaged a nuclear power plant.

Re-insurance companies, which back up insurers and are among those hit early by catastrophes, stressed it was too soon to estimate the final cost, but "it will be an expensive event," said Christian Muschick at the private German bank Silvia Quandt.

In Paris, a sector analyst who asked to remain anonymous told AFP: "After the floods in Australia, the quake in New Zealand and now the one in Japan, the bill for re-insurers is already looking expensive this year."

British investment bank J.P. Morgan Cazenove estimated the quake would cost European re-insurers "a loss in the $1-2 billion scale, no more."

The Italian investment bank Mediobanca agreed, saying: "We expect the reinsurance sector to be significantly affected."

Munich Re and Swiss Re, the industry's leaders, both said it was too early to determine the disaster's impact on their books.

Muschick said the massive Japanese quake that struck Kobe in 1995 and killed 6,400 people cost the industry a total of $6 billion, without adjusting for inflation.

But Munich Re said that quake -- responsible for total losses to Japan of $100 billion -- only cost the insurers $3 billion.

Friday's quake -- the biggest ever recorded in Japan -- was centered at the northeastern city of Sendai, a more rural region, and was very deep. The impact in the capital Tokyo was relatively small.

But Brian McGuire, senior vice president at US reinsurer US Re, said there was a key difference in Friday's quake that could exacerbate losses.

"In today's event, it was an earthquake and a tsunami. The Kobe earthquake in '95 was purely an earthquake event."

A limiting factor to the damage to international insurers is that the Japanese government reinsures most Japanese homeowner earthquake insurance policies in a giant pool fund, said McGuire.

International insurers will also be hit by the damage the tsunami caused significant in other countries around the Pacific region.

But that should not be extremely large -- on the northern California coast in the United States, the damage was mainly to small fishing and pleasure boats caught in harbors that swelled violently from the tsunami surge.

Another factor will be the impact on some $1.5 billion worth of eight Japan catastrophe bonds, special securities sold to investors by reinsurers to reduce their own risk.

Holders of those bonds could get hit, according to McGuire.

The overall effect on reinsurers will not be good, in any case. Just on Thursday Munich Re, the world's largest reinsurance firm, said it expected to pay about one billion Australian dollars (726 million euros, $1.0 billion) for the Christchurch earthquake in New Zealand on February 22.

It also warned it would only achieve this year's profit target if "random major losses" remained below the average expected level.

"Munich Re can most probably forget about its net profit guidance," Muschik said.

AFP