TOKYO (AFP) - A scandal rocking Japanese Internet pioneer Livedoor erupted, sparking a stampede out of the stock market that forced Asia's largest bourse to close early for the first time ever.

Investors took fright at fresh allegations that Livedoor cooked the books to hide losses -- leading the market to question the very foundations of the boom in Japan's Internet trailblazers.

In under 24 hours, Livedoor and its flamboyant founder Takafumi Horie have gone from stars of Japan's Internet revolution to -- for critics at least -- symbols of the very worst of Western-style aggressive business practices.

Livedoor, which offers Internet portal and other web services, is not even listed on the main section but on a market for start-ups, and the extent of the alleged cover-up pales in comparison to recent scandals such as Enron.

Even so, it roiled Asia's largest bourse and hit investor sentiment across the region and as far away as Europe.

The benchmark Nikkei-225 index tumbled by almost five percent in early afternoon trading before clawing back to end the day down 464.77 points or 2.94 percent at 15,341.18 as the bourse shut 20 minutes early.

Daiwa Securities SMBC analyst Kazuhiro Takahashi said the turmoil reminded him of 'Black Monday' in 1987, a historic market meltdown in the United States when trading also was halted early as corporate investors flocked to sell.

"But the difference from Black Monday was that this time it was individual investors who rushed to take profit and sought refuge after the Livedoor scandal," he said.

The furor swirling around one of Japan's most successful Internet companies began late Monday when its offices in the exclusive Roppongi Hills complex were raided for suspected illegal securities trading in full view of the media.

Japanese newspapers carried fresh allegations that the Internet firm misled investors to conceal losses, further spooking investors.

The Tokyo bourse, which in November suffered its worst-ever technical crash, announced a halt to trading in a totally unprecedented move for fear that the huge volumes going through could bring down the system.

The scandal enveloping Livedoor has left in doubt the future of its charismatic founder, who has won a legion of fans with a reputation for taking on the corporate old guard with a brash new style of doing business.

But the establishment now appears to be getting its revenge.