The Japanese prime minister, Keizo Obuchi, says Japan urgently needs a stable yen to stand alongside the dollar and the new European curency, the euro.

Speaking on the eve of a week-long visit to Europe, Mr Obuchi admitted he was fighting a rearguard action to make the yen an international currency following the launch of the euro.

He said the euro was likely to be one of the two key currencies, and Japan needed to make the yen a fully-fledged third pillar of a monetary system which was no longer totally dollar-dominated.

As he heads for Europe, Mr Obuchi leaves behind a continuing wrangle in Japan over his efforts to form a coalition government with the Liberal Party.