Tokyo Stocks Keep Falling Despite Interest Rate Cut

Stocks erased early gains and fell again by midafternoon today as the Japanese market’s meltdown continued.

The 225-issue Nikkei index was off 471.99 points to 18,109.80 in midafternoon trading after plunging 764.16 points Wednesday to a five-year low.

In addition, the broader Topix index was down 52.44 points, or 3.9%, to 1,307.23 after losing 58.85 points Wednesday.

Traders said the Nikkei index rose slightly after the opening today following Wall Street’s gains Wednesday.

But stocks fell back amid selling by fund trusts and by individual traders trying to liquidate positions.

On Wednesday, the Bank of Japan cut its official discount rate from 4.5% to 3.75% to stimulate the economy. But the long-expected move failed to help investor sentiment.

“Even a discount rate cut can’t cure the falling stock market any more,” said Kazuyuki Suzuki, a trader with Daiwa Securities Co. “The Nikkei’s drop below the 18,000-point line is only a matter of time now.”

Government officials met with stock industry officials today to seek ways to rescue the ailing market.

Meanwhile, in foreign exchange trading, the dollar was changing hands at 134.90 yen by late morning. It opened at 134.57 yen, up 0.67 yen from Wednesday’s close. In New York, the dollar finished overnight at 134.50 yen.

Dealers said the Nikkei’s continued downward slide supported the dollar despite worries about intervention by the Bank of Japan.

Hiroshi Murata, a dealer with Sumitomo Bank, said, “Every one is poised to buy (the dollar) if the (Nikkei) average falls again.”