Japanese Market Sinks as Hope for Official Stimuli Fizzles : Stocks: The Nikkei average fell after the finance minister’s remarks punctured a frail rebound.

Japanese stocks ended lower this morning after Finance Minister Hirohisa Fujii said he was opposed in principle to interfering with the free operation of the Japanese stock market, traders said.

The news of Fujii’s comments shattered a delicate rebound in share prices that was triggered by Japanese newspaper reports that the government was considering action to address the problem of plunging stock prices, they said.

The benchmark Nikkei 225 average closed the morning off 68.51 points, or 0.43%, at 16,010.20. The broader Topix index of all shares on the Tokyo Stock Exchange’s first section fell 14.60 points, or 1.08%, to 1,335.88.

Volume on the TSE’s first section was about 140 million shares this morning, down from 160 million shares Monday morning.

Nikkei stock index futures for December delivery rose 50 points to 16,190 in Osaka and climbed 5 points to 15,950 in Singapore.

Fujii told a news conference that he is against the idea of government interference in the stock market. He said that economic stimuli can achieve only limited results, and political reform will take priority over economic reform.

Fujii said that government-controlled funds--such as postal savings and pension funds--should not be used to prop up the stock market.

His comments discouraged investors who had bid up stocks during the morning on expectations that the government would take direct measures to speed economic recovery or support the market, said Geoff Donelan, a salesman with Jardine Fleming Securities.

Prices sank after a meeting of Cabinet ministers ended without any indication that the ministers had discussed the problem of non-performing loans held by Japanese banks. “They discussed economic concerns and they discussed tax cuts, but they didn’t discuss the most important thing of all,” said Tom McCusker, a vice president of equity derivatives at CS First Boston.

In the first hour of trading, share prices rose on optimism kindled by several reports that the government was considering taking steps to stop stock prices from tumbling, traders said.

The Nihon Keizai newspaper said the government will propose an income tax cut amounting to $46 million, perhaps as soon as January. The government wants to raise the consumption tax only after two years, and will cover the shortfall in tax revenues by selling deficit-financing bonds, the report said.

In addition, the newspaper said the Finance Ministry will delay listing Japan Tobacco Inc. until the stock market recovers. The listing, which had been planned to take place by March, 1994, could depress prices further by adding shares to a market with little demand to buy them.

The newspaper also carried stories saying Fujii and Minister of International Trade and Industry Hiroshi Kumagai will meet to discuss financial rescue measures, and that the Bank of Japan will guide short-term rates lower to stem stock declines.

The stories were published one day after the Nikkei 225 average fell 3.87% to its lowest level in more than a year. That had raised hopes that the government would announce some measures aimed at shoring up the stock market, said Ravi Nandigum, a sales agent with Baring Securities.