Japanese Stocks Plunge on Worries About Bad Loans

From Times Wire Services

Japanese stocks plunged, taking the benchmark Nikkei 225 stock index below 18,000 for the first time in 14 months amid concern that bad loans at banks and other lenders will hobble economic growth.

The Nikkei 225, the market's key index, racked up its largest one-day fall in two years, shedding 4.26% of its value in trading today.

After plunging more than 950 points with less than an hour of trading left, the benchmark Nikkei average of 225 leading companies managed to regain some ground by the close.

It ended down 770.22 points at 17,303.55, its lowest level since August 1995. The loss is equivalent to a 282-point drop in the U.S. Dow Jones industrial index.

Over the week, it tumbled 10.6%, including a 3.25% drop on Thursday.

Analysts say the market is being pushed lower by gloom about the state of the Japanese economy and worries about higher taxes. The sensitive banking sector is being hardest hit because of massive problem loans left over from the collapse of real estate values, which had soared in the 1980s.

In the short term, analysts said, the stock market's best chance for recovery is in the hands of the government. They hope that the Japanese Parliament passes measures to revive the country's flagging economy after it convenes Jan. 20.

"All eyes remain on the government," said Yasuo Ueki, head of the equity operations group at Nikko Securities Co.

Investors have expressed disappointment over the lack of action so far to spur economic growth, either through increased public spending or postponing scheduled tax increases.

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