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Japan govt says unfazed by post-G7 market fur

TOKYO: The Japanese government put a brave face on Monday's Tokyo share price plunge and rise in the yen, playing down market turmoil after Friday's rout on Wall Street and a weekend Group of Seven meeting that left many unimpressed.

New Prime Minister Yoshiro Mori, who became premier earlier this month after his predecessor was felled by a stroke, declined direct comment, saying only: "I think it is necessary to watch movements for the time being."

Finance Minister Kiichi Miyazawa, meanwhile, told reporters: "It is in reaction to New York -- this was expected so I'm not surprised. Rather, everyone is interested in what will happen in New York (later) on Monday."

Japan's economy, struggling to pull out of its worst recession in five decades, has seen a gradual rise in stock prices over the last one and a half years but was hit by selling on Monday after New York's share price plunged.

STOCK DROP A 'CORRECTION', GOVT UNRUFFLED

"The strength of the Japanese economic recovery is quite clear, so I'm not particularly worried," Miyazawa said when asked about the Tokyo stock fall as he entered his office after an early morning return to Japan from Saturday's meeting of G7 finance ministers and central bankers in Washington.

Economic Planning Minister Taichi Sakaiya insisted the Tokyo stock fall was a mere correction that would not derail Japan's fledgling recovery, although he said the government must stand ready to spend more money if needed to stimulate the world's second-biggest economy.

"I can't deny there may be a negative psychological impact," Sakaiya said. "But the economy is on an uptrend and this is a correction, so I'm not concerned."

Sakaiya said if the fall in Tokyo stocks was prolonged, it could hurt consumer sentiment and business investment -- the two biggest engines of the Japanese economy. But he described Monday's sales as broad-based profit-taking after recent gains.

Private economists agreed that the recovery could suffer if U.S. share prices keep falling and the long-booming U.S. economy stumbles, but that the fallout might be less than nightmare scenarios suggest.

MIYAZAWA CALM ON YEN BUT READY TO INTERVENE

Tokyo markets were reacting to New York, where the three major U.S. stock indices posted their biggest one-day point declines ever on Friday after new data sparked inflation worries, capping a dramatic weeklong slide on Wall Street.

On Saturday, Group of Seven finance ministers and central bankers held a regular meeting but made no mention of the stock drop and did not reiterate that they shared Japan's concern over the muscular yen.

In Tokyo morning trade, the dollar fell more than 1.5 yen from to a low of 103.92 yen after the New York share plunge, the bland G7 statement and the fact that Tokyo authorities were not seen selling yen in the market on Monday.

He said the G7 had not discussed the possibility of joint yen-selling intervention in the market but made clear Tokyo was ready to go it alone again, as it has repeatedly done when the dollar appeared headed below 100 yen.

"We will intervene any time it is necessary," Miyazawa said. "We don't need to consult with anyone."

The G7 was equally focused on the yen, dollar and euro and their response to the Friday U.S. share slide was to wait and see what happened in New York on Monday, he said.

GOVT COOL TO PROPPING UP STOCK MARKET

Some Japanese politicians called for emergency measures to counter the market furore, but the government response appeared cool.

"This is the ripple effect from the U.S. market, but we must take emergency steps, including the use of public funds," said Shizuka Kamei, policy chief of the Liberal Democratic Party, which dominates Mori's coalition government.

"We must mobilise around one trillion yen ($9.58 billion)," he said, according to Jiji news agency.

The agency said Kamei was to meet the premier's right-hand man, Chief Cabinet Secretary Mikio Aoki, at 2 p.m. (0500 GMT) to discuss his ideas.

But Sakaiya, head of the Economic Planning Agency, when asked about Kamei's proposals to prop up the stock market with taxpayers' money, said: "I don't think that should be done."-Reuters