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Last Updated:  Monday, 10 March, 2003, 06:24 GMT
Nikkei slides below 8,000
Japan's Nikkei index
The Nikkei's downward march continues unabated
The Japanese Government has warned it might intervene in the stock market after the Nikkei 225 share index fell below 8,000 for the first time in 20 years.

"We believe the situation in Iraq has affected the Japanese stock market and we need to closely watch the market movement and take action if necessary," Chief Cabinet Secretary Yasuo Fukuda said.

The Nikkei fell to 7,975.4 before recovering to close down 101.86 points or 1.25% at 8,042.26 points, about a fifth of its value when it peaked in 1989.

The fall has been blamed on Japan's banking sector, which is beset by bad debts and has decided to issue new shares to raise capital.

Over the weekend, Financial Services and Economy Minister Heizo Takenaka called on the Bank of Japan to buy shares, land and investment funds if the market continued to fall.

Yen support

While investors might take some comfort from the assurances, Finance Minister Masajuro Shiokawa on Monday said no interventions should be expected before the end of the financial year on 31 March.

"The government cannot intervene in the stock market," Mr Shiokawa said.

"There is no way (to improve the market) other than through greater efforts by the Japanese business community."

Government officials have also said it is prepared to intervene in the currency markets to prop up the US dollar.

Prolonged weakness of the dollar would seriously damage Japan's export based economy.

The dollar traded at 116.8 yen on Monday, down from 117.0 yen in New York on Friday.




SEE ALSO:
Japanese shares hit 20-year low
07 Mar 03 |  Business
Japan's desperate market move
07 Feb 03 |  Business


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