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Tuesday, 5 February, 2002, 07:28 GMT
Japan shares hit 18-year low
Man lighting cigarette in front of board showing level of Nikkei
The Nikkei later hit a new closing low of 9,475.6
Japan's shares have slumped to a new 18-year low.

The fall in recent days has been due to the declining popularity of Prime Minister Junichiro Koizumi following the controversial sacking of his foreign Minister Makiko Tanaka.

But stocks have been in a gloomy mood all year as promised economic reforms have failed to materialise.

The benchmark Nikkei index finished below a key post-bubble closing low, dropping 156 points to end at 9,475.6, its lowest level since 15 December 1983.

It also fell below the slump caused by the 11 September terrorist attacks.

Reforming powers

Mr Koizumi was once thought to be the man able to implement the radical reforms needed to lift Japan's ailing economy out of the doldrums.

But his waning popularity has undermined investor belief that he will indeed be able to push through the much-needed economic reforms.

Japan's economy has been stagnant for over 10 years.

Traders said institutional investors, including foreign players, were dumping large amounts of blue-chip issues such as Sony and Toyota amid mounting political instability.

It was the fourth most active trading session of the year.

Talking it up

Japan's top government spokesman expressed concern over the recent falls.

"We are greatly concerned and when it is necessary we will take firm measures," said Cabinet Secretary Yasuo Fukuda, adding that he thought Japanese stocks were too cheap.

US shares were also weak on Monday, with the Dow Jones Index closing 220.17 points lower at 9,687.

The falls in the US are Enron-driven, as investors begin to worry about the accounting practices of similar firms.

The Nikkei has also fallen below its US counterpart, the Dow Jones Industrial Average, for the first time since 1957.

 WATCH/LISTEN
 ON THIS STORY
The BBC's Charles Scanlon
"The Nikkei average is more than 70% below its peak"
See also:

02 Feb 02 | Business
'No quick fix' for Japanese economy
01 Feb 02 | Business
Sacking spells trouble for Japan Inc
29 Jan 02 | Business
Japan jobless rate hits new high
24 Jan 02 | Business
Japan suffers export slump
28 Jan 02 | Business
Japan retail sales fall
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