The Tokyo stock market has plummeted more than 500 points, falling below the psychologically important 15,000 mark for the first time in more than two years.

At one point in trading the Nikkei stock average was down by 4.5%. It ended the day at 14,799, down 515 points.

The dramatic drop followed a 5.24% fall on Friday, the third-largest single-day point decline of the year.

The latest slide in share prices comes in spite of a government package to stimulate the economy by cutting taxes.

The BBC Tokyo Correspondent says that there was no single factor behind the latest decline. But many Japanese fear that more companies may go bankrupt and things will get worse before they get better.

Japanese firms take action

Another bad day for Japanese traders

The Japanese car manufacturer, Toyota, has suspended production at two factories in the Philippines

Officials blamed the decision on sluggish demand in the region. Toyota will cut production by several thousand vehicles.

The bad news spurred more gloomy predictions. The International Monetary Fund, which in the past has been upbeat about Japan's future, admitted it had been too optimistic about the Japanese economy.

The dollar was stronger in Tokyo after falls for both the yen and share prices. There were lingering worries over the collapse of the major food company, Toshuku.

Toshoku went bust with liabilities totaling 639.7 billion yen ($4.95bn), becoming the ninth Japanese company with publicly traded shares to fail this year.

No quick relief for the "Asian flu"

There were further gloomy predictions for Asian economies.

One of the leading credit risk agencies, Moody's Investors Service, downgraded the foreign currency credit ratings of four countries - Indonesia, Malaysia, South Korea and Thailand.

Moody's said the recent financial crisis in the region had exposed the vulnerability of countries that had built up large short-term liabilities.

Weaknesses in the Japanese economy would affect recovery prospects.

The South Korean won also opened lower against the US dollar in early trading. Share prices, however, rose slightly.

Analysts reported optimism that the new administration of president-elect Kim Dae-Jung would prove to be more effective in managing the economy than its predecessor.

But they said the weaker won was keeping investors in check. The won stood at 1,650 against the US dollar after early trading.

The composite share index closed the morning up 7.02 points, or 1.75%, at 407.21, off a high of 409.04.

Back to top | BBC News Home | BBC Homepage	©