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Japan moves to shore up slumping market Nikkei average falls to 6-year low


TOKYO -- Japanese Finance Minister Tsutomu Hata said yesterday that his ministry will discourage banks from selling stocks to generate cash, allow financial institutions to raise dividend payout ratios and take other small steps to support Japan's plunging financial markets.

Analysts said the government appeared to recognize the severity of the current market crisis but added that the measures announced yesterday were insufficient to save the market from further declines. The benchmark Nikkei 225 stock average fell 4.15 percent yesterday to a six-year low of 14,309.41.

The market has fallen 37.74 percent so far this year amid gloom about corporate earnings prospects and doubts that the government can or will do anything meaningful to revive the economy.

"The government this week recognized the serious threat the falling stock market is to the financial system," said Aaron Martin Cohen, senior economist with Daiwa Securities. But, he said, the measures fall short.

"The only bottoms we're going to see around here for the next months are going to be on the beach," said Mr. Cohen.

Speaking to reporters this afternoon at a news conference, Mr. Hata said excessive stock sales by cash-strapped financial institutions could further depress the already devalued market. Mr. Hata sidestepped a reporter's question on the wisdom and effectiveness of government intervention in financial markets.

Mr. Hata said the ministry will allow financial institutions to raise dividend payout ratios to make stock investments more attractive and encourage more bank lending to industry and the real estate sector while urging banks to improve their capital adequacy ratios.

To help financial institutions dispose of bad real estate assets, the ministry will implement measures to stimulate the real estate market, Mr. Hata said. For example, the ministry plans to allow sales of small-lot real estate credits, he said.

In an effort to increase disclosure in the banking business, the ministry will urge the institutions to disclose the total value of their devalued real estate assets at the end of the current fiscal year through March 1993.

Mr. Hata said the government believes that such measures, along with additional fiscal measures to be unveiled by the end of this month, will help revive the country's slumping stock market by the end of the current fiscal year.

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