Political crisis fuels market slide

Stocks have slumped to a 16-year low

Political uncertainty has deepened in Japan in the face of Prime Minister Yoshiro Mori's refusal to set a date for party leadership election or to make it clear whether he intends to stand.

Members of Mr Mori's Liberal Democratic Party were seeking clarification of his plans at a convention on Tuesday - but the prime minister merely confirmed that he intended to bring forward the election date.

Keeping quiet: LDP colleagues are furious that Mori won't clarify his position

Amid the ongoing political confusion, Japan's stock market fell to new lows on Tuesday, plunging below 12,000 for the first time since 1985.

The Nikkei closed at 11,819.70 on Tuesday, down 351.67 points or 2.89 %, driven by big overnight losses in New York, fuelling fears that the US economic slowdown is poised to hit Japanese exports hard.

In response Japan's Economics Minister, Taro Aso, called for new measures to halt the slide, including a revision of the current tax regime.

Unpopular

Mr Mori has not ruled out standing in a leadership race, but as his support rating stands at below 10% - an election would almost certainly lead to his replacement.

Mori's troubles

9 Feb: Plays golf after hearing of sub collision

19 Feb: Rejects calls to resign

5 March: Survives no-confidence vote

10 March: Brings forward party leadership election

13 March: Refuses to confirm his candidacy for re-election as LDP leader

Mr Mori has made it clear he plans to attend separate summit meetings this month with Russian President Vladimir Putin and US President George W Bush.

He has also said he wants to see the budget through parliament in April. Some analysts suggest a poll could take place soon afterwards.

But opposition leaders continued to pile pressure on Mr Mori on Tuesday, filing a censure motion in parliament calling for his immediate resignation.

'No direction'

Their calls were supported by the Japanese media, which bemoaned the lack of direction from the government at a time of near economic crisis.

Press speculation has been rife

"We can't afford a political blank at a time when a deflationary crisis looms and the economy is in a critical situation," said an editorial in Yomiuri, the country's largest newspaper.

But despite the growing consensus that Mr Mori's position is untenable, no clear successor has yet emerged.

The issue is proving bitterly divisive among Liberal Democratic Party members, amid fears that factional leaders will attempt to choose a new prime minister in private.

Representatives from the Tokyo Assembly boycotted the Tuesday convention and staged a protest demanding a democratic election with each member receiving a vote.