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Nikkei Index Drops Again; Hits 19-Year Low

Falloff undermines value of Japanese bank assets and threatens efforts for faster economic recovery.

November 15, 2002|From Associated Press and Bloomberg News

TOKYO — Japan's best-known stock market gauge tumbled to 19-year lows for the second day in a row Thursday amid mounting pessimism about the economy's ability to make a quick comeback.

The 225-issue Nikkei index lost 135.13 points, or 1.6%, to 8,303.39. It was the lowest close since March 25, 1983.

At midday today, the Nikkei was rebounding, up 1.5% to 8,433.

The sagging Tokyo market has become a focus of Prime Minister Junichiro Koizumi's economic comeback plan. The continued slide in share prices is undermining the value of assets held by the nation's teetering banks, making it more difficult for them to dispose of billions of dollars in bad loans that have been on the books for years.

Shares were hammered again Thursday by new economic data that showed a tapering off in Japanese exports. Japan's tenuous economic growth largely depends on healthy sales overseas, so any dive in exports could spark economic contraction.

Stocks sank further after the Times of London reported that Hiroshi Okuda, chairman of Toyota Motor Corp. and head of Japan's powerful industrial association Keidanren, said that at least one of Japan's big four banks was likely to be nationalized as part of government efforts to clean up bad loans.

Shares of Mizuho Holdings, the world's largest bank, fell 14%. UFJ Holdings, Japan's fourth-largest bank, lost 15%.

"The whole situation remains negative for the economy," said Momoru Yamazaki, an economist with Barclays Capital in Tokyo. "It's not just the news today, it's a lack of economic policies to turn things around."

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