TOKYO — Pessimism over prospects for Japan's economic recovery sent the benchmark index of the Tokyo Stock Exchange plunging to the year's lowest level today.
Prices tumbled in early afternoon trading, then partially recovered.
The 225-issue Nikkei Stock Average slipped below the psychologically critical benchmark of 16,000 points shortly after afternoon trading began. At 1:08 p.m., the Nikkei was quoted at 15,671.97 points, down 971.79 points, or 5.77%. The index hadn't fallen below the 16,000 mark since last November.
But the index rebounded before closing at 16,078.71, down 647.66 points, or 3.87%.
This year's previous low for the Nikkei was 16,287.45 on Jan. 27. The Nikkei's lowest close in recent years was 14,309.41 on Aug. 18, 1992.
The U.S. dollar remained higher against the Japanese yen as investor interest focused on the stock market.
The nose-dive drew a mixed reaction from government officials. Hiroshi Kumagai, minister of international trade and industry, called for dramatic steps to stimulate the economy. However, Finance Minister Hirohisa Fujii said there was nothing the government could do to arrest the plunge.
The market's decline reflects concern that the economy remains mired in recession despite repeated government spending packages aimed at boosting demand.
Government officials have indicated no immediate plans to bolster the sagging stock market.
Many Japanese manufacturing and other industrial sectors reported sharp profit declines in their midterm reports at the end of September, and many firms have announced job cuts or cutbacks in production.
Monday's tumble was also attributed to concern that the government is too preoccupied with political reform legislation and other problems to deal with a draft budget for fiscal 1994, which begins April 1, before the end of the year.
In recent sessions, the Tokyo market has been dominated by sellers seeking to cut their losses amid signs that the recession is likely to continue.