Japan stocks rise in late rally

The Nikkei index briefly fell below the 7,000 mark

Japan's Nikkei index staged a late rally on Tuesday to close up 6.4%, having earlier fallen below the 7,000 mark for the first time in 26 years.

Authorities said that to stabilise markets they would bring forward a ban on traders selling shares that they do not already own and have not borrowed.

The Nikkei 225 index closed up 459.02 points at 7,621.92.

Exporters were helped by a sharp fall in the value of the Japanese yen against the US dollar.

The yen has been appreciating against the dollar recently, but on Tuesday its value fell to 95.51 yen to the dollar from 93.01.

Asian gains

Share prices across Asia had initially lost ground again on opening, following volatile trading throughout the world.

South Korea's Kospi index initially dropped 2.6%, but later rose to finish 5% up on the day.

Hong Kong's Hang Seng closed up 14.4%, which was its biggest daily percentage gain for 11 years.

It followed a 12.7% decline on Monday.

Japan's Finance Minister Shoichi Nakagawa told reporters that the ban on naked short-selling, which had been due to come into force on 4 November, would be brought forward.

Naked short-selling involves making a deal to sell shares that you do not own and relying on being able to buy the shares before the deal has to be settled.

It is done by traders who hope that the price of the shares will fall between the sale and the purchase of the shares, allowing them to pocket the difference.

The announcement follows similar moves by governments in the US, Australia and Europe.

"I decided on the measure because these few days will be critical and stock exchanges are facing risks unless we take quick action," said Mr Nakagawa.

"Japan was easily under pressure from other sources and that is why is was important to change the rules to US and European standards."

Meanwhile Japan's Prime Minister Taro Aso has said he will delay calling a general election in order to handle the economic crisis, according to the Kyodo news agency.

Mr Aso, who took office a month ago, had been widely expected to call an early election to address the deep divisions in the Japanese parliament.

European shares

Stock markets in the US and Europe ended lower on Monday amid a growing belief that key economies are heading into recession.

On Wall Street, the main Dow Jones index fell 2.42%, despite being boosted earlier in the day by a surprise rise in new home sales in September.

The FTSE 100 in London closed down 0.79%, the Cac 40 in Paris ended down 3.96% but the Dax in Frankfurt was up 0.91%.

Earlier the FTSE had fallen 5.6% to 3,665 points - its lowest level since April 2003.