Japan Says Will Act Decisively Against Share Falls

Japan will act decisively to prevent stock price falls from causing a credit crunch, the finance minister said on Tuesday as the Nikkei 225 Average slipped near a 26-year low on worries over global economic weakness.

Kaoru Yosano, who is also economics minister, added that the government would take whatever steps necessary to keep the economy afloat, such as issuing deficit-covering bonds to fund additional fiscal stimulus measures now under consideration by ruling parties.

"We'd like to act based on an agreement of countries across the globe that each nation will take whatever steps necessary to achieve an economic recovery."

Tokyo's Nikkei 225 Average fell 0.9 percent on Tuesday after Wall Street ended weaker, and some market players expect it to break below a 26-year low hit in October. It marked a 26-year closing low on Monday.

Analysts say Japanese banks, while not as badly mauled by the global financial crisis as their Western peers, may be forced into a fresh round of capital raising soon as sharp stock price falls swell their losses.

In a news conference after a cabinet meeting, Yosano reiterated that the ruling parties were considering what steps were available to cope with falling stock prices.

The government, for its part, will act decisively to prevent a credit crunch caused by any such stock falls, he said.

Asked whether the government might issue deficit-covering bonds to fund additional fiscal stimulus measures, Yosano said: "We will take whatever measures available."

Some economists predict the world's second-largest economy could shrink for a record four quarters as exports slump and domestic demand sputters.

In an effort to beat its worst recession since World War Two, Japan plans to issue 33 trillion yen ($334 billion) in new bonds to fund its biggest-ever budget for the fiscal year from April. That budget, along with two extra ones, will finance a stimulus program sized at 12 trillion yen, or more than 2 percent of GDP.

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Ruling party lawmakers are considering another package with some calling for spending of up to 30 trillion yen, leaving markets guessing how it would be funded.

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