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Japan to inject funds into firms, hand out cash
 
 
 
 
 
 
 AFP - 1 hour 12 minutes ago
TOKYO (AFP) - - Japan said Tuesday it would inject public funds into companies to help them through the recession as parliament passed a 54-billion-dollar extra budget including cash handouts for households.
The latest effort to ease a credit crunch in Asia's biggest economy came as Japan's top securities firm Nomura Holdings posted a record quarterly loss of 3.8 billion dollars and electronics maker NEC Tokin announced 9,450 job cuts.
Japan has already offered financial lifelines to banks hit by the worst economic crisis since the Great Depression.
Now it plans to channel funds to other industries through state-backed lenders in a scheme local media said could be worth 1.5 trillion yen (17 billion dollars).
Tokyo's Nikkei stock index soared 4.9 percent as investors cheered the news, which came as Washington pushed ahead with efforts to revive the US economy, confirming Timothy Geithner as Treasury Secretary.
"Markets welcomed the plan as it would mean that capital would flow to companies and the economy. Fears that companies may go bankrupt eased," said Okasan Securities equity strategist Hideyuki Ishiguro.
But the market rally may be short-lived as "economic conditions in general remain severe and the plan is unlikely to revive the economy in the mid and long term," he added.
Parliament gave the go-ahead to an emergency stimulus package including a controversial plan to give 22 billion dollars back to the public.
The handouts had been held up for a day due to feuding between Prime Minister Taro Aso's government -- whose approval rating has nosedived during the financial crisis -- and the opposition, which said the plan was wasteful.
Japanese companies have been severely affected by the global economic downturn, which has pushed the world's second largest economy into its first recession in seven years.
NEC Tokin, a subsidiary of high-tech giant NEC Corp., said it would shed about 450 domestic posts and 9,000 jobs overseas, the latest in a wave of global layoffs.
Honda Motor Co. said it would roll back production further in Japan and North America, although it is stepping up output in China.
Nomura reported a net loss of 342.9 billion yen (3.8 billion dollars) for the fiscal third quarter, against a year-earlier profit of 21.8 billion yen.
"Last quarter was extraordinary for our industry and Nomura was no exception," said company president Kenichi Watanabe. "However, our financial position remains strong."
Nomura, which last year bought swathes of failed US bank Lehman Brothers, said it lost 43.1 billion yen due to Iceland's financial crisis and 32.3 billion yen due to exposure to alleged Wall Street swindler Bernard Madoff.
Japanese financial firms are believed to be less exposed to losses related to troubled US mortgage loans compared with many Western banks, but they have been hit hard by weak markets and the recession.
"Nomura's heavy losses leave no doubt that the global financial crisis has caught up with Japan," said Neil Katkov, head of Asia research at the Celent consulting firm.
Japan suffered sharp falls in exports and industrial output in December, prompting warnings from analysts that the economy probably contracted by an annualised 10 percent or more in the fourth quarter of 2008.
According to a survey, 400,000 temporary workers in Japan's manufacturing sector are expected to lose their jobs by the end of March.
Japan has an estimated one million non-regular employees in the manufacturing sector, of which 20 percent have already lost their jobs, according to the joint survey by a labour association and an outsourcing group.
 
 
 
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