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Tokyo stocks hammered, BoJ unleashes record funds

14 marca, 2011

Japanese stocks tumbled Monday and the central bank poured a record amount of cash in a bid to soothe money markets shaken by Japan\'s biggest ever earthquake, a devastating tsunami and a nuclear emergency.

Stocks saw a massive sell-off, with car makers slumping while banks and electronics firms also suffered heavy losses as power shortages prompted blackouts and plants remained closed in quake hit areas, hurting production.

The Bank of Japan said it would pump a record 15 trillion yen ($184 billion) to help stabilise the short term-money market, making good on its pledge Sunday that it would unleash "massive" funds following the quake.

The bank will provide an additional 3 trillion yen Wednesday.

"There was panic selling in morning trade following the quake and tsunami," said Masumi Yamamoto, equity market analyst with Daiwa Securities Capital Markets.

Tokyo shares plunged 6.11 percent Monday afternoon with the key Nikkei index slumping below 10,000 to its lowest levels since November, down 626.48 points at 9,627.95.

Many top Japanese firms have said they are suspending operations.

Automakers Toyota, Nissan and Honda have announced the suspension of production in Japan for the time being. At one point Toyota and Nissan slumped more than 10 percent while Honda gave up more than eight percent before all three bounced back.

The government has said it expects a "considerable" economic impact from the huge earthquake and devastating tsunami that plunged the nation into what Prime Minister Naoto Kan called its worst crisis since the Second World War.

The priority of the central bank is to ensure financial institutions in disaster-hit regions do not run out of funds. Over the weekend it provided them with 55 billion yen to ease the pressure before Monday\'s fresh fund move.

"The Bank of Japan has acted quickly to secure the liquidity of the market and made sure to stabilise it," said Hideaki Inoue, chief manager at forex trading at Mitsubishi UFJ Trust and Banking Corp.

"The yen is coming back to a lower level in response."

The yen briefly touched a four-month high before easing against the dollar on the massive liquidity injection Monday as markets responded to the natural disaster.

It briefly surged to 80.60 against the dollar, the highest since November 9, before retreating to 82.15, and held steady despite a fresh explosion at the stricken Fukushima nuclear plant Monday as engineers battle meltdown risks.

It was the first time since May, when European sovereign-debt fears pushed up the yen steeply and weighed on Tokyo shares, that the central bank injected same-day funds to boost confidence.

The BoJ\'s two-day policy board meeting previously scheduled for Monday and Tuesday would now be cut short and conclude on Monday, seen as a sign it may quickly implement further measures.

Economists say it is still too early to assess the cost of the destruction from the record 8.9-magnitude quake and the 10-metre wall of water that laid waste to swathes of the northeastern coast and triggered an atomic emergency.

A mammoth rebuilding task will be required in the aftermath of a disaster whose economic impact is widely expected to be at least as bad as that from the 1995 Kobe earthquake.

The official death toll is certain to rise substantially to more than 10,000.

The quake and tsunami have damaged or closed down key ports, although airports such as Tokyo\'s Narita have reopened. Transport infrastructure such as train lines and roads have been crippled along parts of the northeast.

Production has been slashed, and automaker shares fell heavily Monday.

The world\'s biggest automaker Toyota was down 7.78 percent at 3,315 yen, Nissan was off 10.27 percent at 716 and Honda lost 7.55 percent at 3,060.

"In the auto sector, speculation is mounting that carmakers would be forced to further suspend operations due to the disaster," said Yamamoto.

"It will take more time to assess an actual impact of the disaster on the sector."

Shares in plant operator Tokyo Electric Power (TEPCO) and Tohoku Electric Power remained ask-only on massive selling demand amid concerns about nuclear power plant shutdowns.

With its two Fukushima nuclear plants damaged by Friday\'s quake, the company is planning an unprecedented rationing of power later in the day to make up for an expected power shortage.

An big explosion shook TEPCO\'s quake-damaged Fukushima Number One nuclear power plant Monday but the reactor was apparently not breached, the chief government spokesman Yukio Edano said.

Toshiba, which manufactures nuclear reactors, fell by its 16 percent daily limit to 411. Sony, which has also shuttered plants, was off 9.01 percent at 2,553.