Tokyo buoyed by prop-up plan

JAPANESE stocks rose sharply today as politicians began wrapping up the package which they hope will rescue the Tokyo stock market from a further descent below 19-year lows.

In other Asian markets the US war of words on Iraq may not be frightening Saddam Hussein but it has jarred the nerves of investors and traders.

A weekend of pessimistic commentaries on the impact of Middle East hostilities on key oil prices, and worries about an anniversary terrorist attack on 11 September, kept trading low and markets mixed, although good employment figures from the US on Friday helped to underpin some prices.

The Nikkei 225 jumped 177.19to 9306.26 on reports the government was putting together yet another set of measures designed to prop up markets.

Prime Minister Junichiro Koizumi confirmed that policies to combat deflation would be compiled after his ground-breaking trip to North Korea next week. These would include new tax breaks and reforms to the banking system.

Measures aimed directly at the stock market were reported to include purchases of exchange-traded funds using three trillion yen (£16.2bn) of government money and tax reforms, which would help the market suck up stocks being unloaded by cash-strapped banks.

While analysts lamented this was just another futile attempt at avoiding the real reforms needed in the banking system, stocks of major local lenders jumped. Mizuho Holdings, the world's largest bank, added almost 6% while hopes of a commission bonanza sent brokers sharply ahead, led by Nomura, which added more than 4%.

A fall in US unemployment to a fivemonth low cheered up stocks of major exporters, led by Sony, while shares in Toyota motored ahead more than 2% on hopes of better overseas sales and plans to add a fifth manufacturing plant in America.

The continuing war talk was good for oilrelated stocks, but bad news for airlines.

Australia's All Ordinaries was lifted 25.2 to 3067.3, as resources stocks benefited from firm oil prices on world markets. BHP Billiton and Woodside Petroleum moved up by around 1.5%. Qantas shares fell almost 2% on worries over costlier fuel and the stock is now below the level of its recently announced rights issue. In Hong Kong, locally quoted Chinese energy groups strengthened, with industry leader Cnooc up 3.3%. Other stocks failed to respond to Wall Street's strong close on Friday as war worries kept investors away and the Hang Seng slid 14.47 to 9706.39.

Among the worst hit of regional air operators was Singapore Airlines. It slumped almost 4% to a nine-month low in the wake of rising oil prices, while concern about a Middle East attack hit other stocks. Singapore's Straits Times index touched a 10-month low of 1431.49, down 11.09.

While shares of South Korean exporters rose on the US unemployment figures, the potential for rising oil prices to cramp the country's growth saw the Kospi slide 5.71 to 703.02.

Friday's strong US Nasdaq performance lifted shares of Taiwan's electronics leaders and the Weighted Average gained 8.96 to 4468.33. While Malaysia's Kuala Lumpur Composite lost 11.44 to 682.65, Thailand's SET was up 0.09at 353.64. Indonesia's Jakarta Composite edged up 0.40 to 428.20.