Japan stocks down despite interest-rate cut

December 19th, 2008 - 5:53 pm ICT by IANS  

Tokyo, Dec 19 (DPA) Stocks in Tokyo closed lower Friday as a decision by the Bank of Japan to lower its key interest rate to 0.1 percent failed to create optimism among investors.The benchmark Nikkei 225 Stock Average closed down 78.71 points, or 0.9 percent, at 8,588.52.

The broader Topix index of all first-section issues also declined 4.26 points, or 0.5 percent, to 834.43.

For the week, however, the two indices posted gains. The Nikkei was up 4.3 percent and the Topic 2.6 percent.

The Bank of Japan ended a two-day meeting Friday, after which it cut its overnight lending rate from 0.3 percent as expected, as the world’s second-largest economy finds itself in recession.

The central bank had been under pressure from the government to stimulate the contracting economy by pumping more money into financial markets to ease a credit crunch and to prevent a further rise in the rapidly appreciating yen.

The bank’s policy board voted 7-1 for the reduction, bringing its key rate close to its near-0-percent rate during its economic crisis of the 1990s.

On currency markets at midday, the dollar was quoted at 89.15-20 yen, up from Thursday’s 5 p.m. quote of 87.91-92 yen.

The euro was quoted at $1.4290-95, down from $1.4418-20 late Thursday, and at 127.42-47 yen, up from 126.75-79 yen.

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