Japan Stocks Close At 12-Year Low

The benchmark index for Tokyo share prices closed below 13,000 points for the first time in more than 12 years Monday amid lingering worries about the health of Japan's economy. The dollar rose against the yen.

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The benchmark Nikkei Stock Average of 225 selected issues shed 275.57 points, or 2.08 percent, to close at 12,948.12. The last time the Nikkei closed below the psychologically important 13,000 mark was on Jan. 30, 1986, when it finished at 12,949.04.

On Friday, the Nikkei briefly dropped below 13,000 but later recovered to post a 26.57-point gain, or 0.20 percent.

The dollar bought 135.76 yen in late-afternoon trading, up 0.98 yen from late Friday in Tokyo and above its New York level of 135.65 yen on Friday. During the day, it ranged from 134.40 yen to 136.10 yen.

The yen weakened on disappointment that officials at a meeting of the Group of Seven industrialized nations failed to issue a more concrete statement about what should be done to fix Japan's debt-ridden banking sector and revitalize its recession-bound economy.

The statement said G-7 countries expect European economies to achieve "stronger growth" as their recoveries pick up steam, giving a boost to the German mark, traders said.

Japanese institutional investors, such as life insurers and investment trusts, bought the mark and sold the yen, which boosted the dollar against the yen in the process, dealers said.

"Everyone seems to feel safe for now in buying the German currency," said Takayuki Togawa, manager of foreign exchange at Tokai Bank.

Traders said stocks would remain weak until Japan's ruling and opposition parties agree on how to strengthen the ailing financial system.

At their meeting in Washington, the G-7 nations urged Japan to take "swift and effective action," including the prompt enactment of measures to support viable banks with public assistance.

The G-7 consists of the United States, Japan, Britain, Italy, France, Canada, and Germany.

Although the statement gave a boost to bank shares, traders doubted Japan's major opposition parties would agree to plans to let weak banks draw public funds.

"The outlook is extremely severe," said Sachio Ishikawa, general manager of the stock division at Chuo Securities.

The broader Tokyo Stock Price Index of all issues listed on the first section fell 17.33 points, or 1.71 percent, to close at 996.69, sinking below 1,000 for the first time since November 1985.

Trading on the exchange's main section was estimated at 360 million shares, down from 516 million share Friday. Declines outnumbered advances 818 to 319, while 157 issues were unchanged.

The yield on the benchmark No. 203 10-year Japanese government bond rose to 0.730 percent from 0.715 percent Friday, driving its price down to 109.69 from 109.84 yen.