Six Industrialized Powers Reject an International Effort to Calm Japanese Markets : Global economy: But the door is left open for a modest intervention to help stabilize the yen.

Top economic policy makers of the major industrialized nations Saturday rebuffed a bid by Japan for a major new international effort to calm the turbulent Tokyo financial markets, but they left the door open to possible modest intervention in the currency markets to help stabilize the yen.

At a meeting here, the finance ministers and central bankers of the organization known informally as the Group of Seven declined a Japanese request that they reduce interest rates in their own countries--or intervene massively in the foreign-currency markets--to help Japan avoid having to raise its own interest rates.

In a move that could presage some token intervention, the group issued a brief communique that warned that the yen’s recent decline could have “undesirable consequences” for the effort to reduce the U.S. trade deficit. And it called generally for “greater stability” in the currency markets.

However, U.S. and foreign analysts interpreted the wording mainly as a face-saving gesture for the Japanese that did not imply either major intervention or interest-rate changes by the six other members of the Group of Seven--the United States, West Germany, Britain, France, Italy and Canada.

J. Paul Horne, the Paris-based chief economist of the Smith Barney Harris Upham investment firm, said the other countries’ conspicuous refusal to rescue Japan reflected their view that the financial turmoil in Japan “is clearly a Japanese problem,” brought on by Tokyo’s recent failure to combat inflation.

Alan J. Stoga, manager of Kissinger Associates, a New York consulting firm, agreed. Stoga said Saturday’s statement--which he termed “about as weak as it can be”--would have to be backed up by heavy intervention on Monday and Tuesday to have any credibility in the foreign-exchange markets.

Stoga also predicted that the refusal of the ministers to provide the bold international rescue effort that Japan had been seeking would force Tokyo to raise its interest rates very soon now. He said Saturday’s action seemed intended partly to provide “a political cover” for Tokyo to act.

The decision of the Group of Seven not to move more visibly reflected a series of internal differences, both among top U.S. economic policy makers and between the United States and West Germany, the two Group of Seven members that might have had sufficient clout to help stem the yen’s decline.

Although the Bush Administration initially had seemed willing to go further to accommodate Japan, the independent Federal Reserve Board--which must acquiesce for any such deal to go through--and, more recently, the White House and the State Department, all had opposed any cut in U.S. interest rates.

That position marked a turnabout for the White House, which until only recently had been pressing the Fed to reduce interest rates at home. Policy makers said the White House now agrees with the Fed that lowering rates now would risk sparking a backlash that could push market rates even higher.

U.S. Treasury Secretary Nicholas F. Brady called the Saturday session “a good . . . meeting.”

The differences between the United States and West Germany were more subtle. Although Bonn supported the U.S. position from the start, some officials said it was decidedly less firm about it. The yen has dropped a full 30% against the deutschemark, hurting West German trade with Japan.

Despite the failure of the Group of Seven to be more forceful, Japanese officials hailed Saturday’s communique as likely to be sufficient to restore confidence in the Japanese financial markets. So far this year, the yen’s value has plunged 11%, the Japanese stock market has fallen a hefty 27% and the bond market has collapsed.

Makoto Utsumi, Japan’s vice minister of finance for international affairs, told The Times after the meeting that the statement was important because it marked “the first time” that the Group of Seven had “singled out” the yen. He said a phrase pledging to keep the matter under review “is very strong.”

But officials conceded privately that it was not immediately clear whether the financial markets, which will open again on Monday, will be persuaded by the Group of Seven statement. U.S. officials declined to elaborate on the statement, insisting that it should “speak for itself.”

The action Saturday followed a daylong discussion by the ministers that ranged from a review of the global economy to the impact of the coming reunification of East and West Germany and the creation of a new European development bank to make loans to the emerging East European democracies.

Although the economies of several of the countries--including the United States--have slowed markedly in recent months, the ministers said the easing is a boon because there no longer is a danger that these economies might overheat.

But they warned that the effort to reduce the outsized global trade imbalances is proceeding “unevenly.” And they recommended that countries such as the United States, which have large trade deficits, do more to increase their saving, while so-called “surplus” countries move to increase spending.

In a bow to West Germany, the ministers also sought to reassure their constituents that the proposed reunification of Germany--and the monetary union that is expected to accompany it--would “contribute to improved global growth” and the narrowing of several imbalances on the trade front.