Tokyo stocks fall on disappointment over stimulus plan

Web posted November 13, 1998

Associated Press

TOKYO -- Tokyo share prices fell sharply today as investors found nothing fresh in the Japanese ruling party's proposed economic stimulus package. The U.S. dollar rose against the yen on speculation the United States was planning to attack Iraq.

The benchmark 225-issue Nikkei Stock Average shed 352.96 points, or 2.45 percent, closing at 14,075.06. On Wednesday, the index had gained 319.93 points, or 2.27 percent.

In late afternoon, the dollar bought 123.22 yen, up 2.10 yen from late Wednesday in Tokyo and also above its late New York level of 121.72 yen.

On the stock market, selling accelerated in the afternoon as many investors found no new encouragement in measures proposed by the governing Liberal Democratic Party to help lift Japan out of recession, traders said.

The opposition Liberal Party is pushing for a cut in the 5 percent consumption tax, but it could meet opposition from the LDP.

The centerpiece of the LDP package is $82 billion in public works-related spending through next March and $33 billion in income tax cuts next year.

With planned corporate tax cuts and other tax relief measures included, the package likely would total a record $148 billion. In line with the LDP's package, the government plans to announce a set of measures to stimulate the nation's economy next Monday.

Trading was moderate today, with about 404 million shares changing hands on the first section, up from Wednesday's 386 million. Declines outnumbered advances 778 to 361, with 139 issues unchanged.

The broader Tokyo Stock Price Index of all issues listed on the first section was down 15.19 points, or 1.38 percent, to 1,082.93. It had gained 19.8 points, or 1.84 percent, the previous day.

Meanwhile, traders rushed to buy dollars amid U.S. tensions with Iraq. The United States and Britain have been threatening a military strike since Iraq said late last month it was stopping the activities of the U.N. Special Commission, which is responsible for eliminating Iraq's weapons of mass destruction.

With U.S. forces in the Gulf region beefing up, President Clinton said that not enforcing U.N. demands for arms inspections would be a costly mistake.

The dollar often strengthens at times of international tension as investors see it as a financial haven.

The yen came under renewed selling pressure from investors' disappointment in the LDP's proposed stimulus package, market players said.

The dollar ranged between 121.42 yen and 123.32 yen in today's trading.

The yield on the benchmark No. 203 10-year Japanese government bond fell to 0.820 percent from Wednesday's finish of 0.855 percent, driving its price up to 108.71 yen from 108.37 yen.