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Japan Stocks Moderately Lower

January 6, 1998

TOKYO (AP) _ The dollar continued its climb against the yen today despite Japanese central bank intervention and government warnings against letting the yen become too weak. Tokyo stocks fell for a second straight day.

Japanese investors were selling yen amid mounting worries over prospects for an economic recovery at home and elsewhere in Asia, where Japan is a major lender.

In late afternoon, the dollar was trading at 133.58 yen, up 0.74 yen from late Monday in Tokyo but slightly below its late New York level of 133.78 yen. It had gained 2.92 yen in Tokyo trading Monday.

Traders said they believe the Bank of Japan sold dollars for yen after the U.S. currency went as high as 134.38 yen _ its highest level since hitting 134.95 yen on April 27, 1992. The dollar fell as low as 132.60 yen.

By midday in Tokyo, the dollar was back to just below the level that triggered the early bout of central bank intervention. Investors quickly moved in to buy dollars on dips.

``We are worried about the situation today,″ Finance Minister Hiroshi Mitsuzuka said. ``An excessively weak yen, as I have always said, is undesirable, and we will maintain our policy to deal with it appropriately at an appropriate time.″

But investors remained skeptical about the effectiveness of central bank interventions.

``No single-country intervention can stop the dollar’s rise because the fundamentals of the Japanese economy are still the same,″ said Yosuke Seike, a Dai-ichi Kangyo Bank trader.

Tokai Bank trader Takayuki Togawa said investors were focusing solely on reasons to sell yen for dollars.

``Asian currencies are tumbling and there are serious concerns about Japan’s economy,″ he said. ``With fundamentals for the U.S. economy strong, money is rapidly shifting from Asia to the United States.″

Persistent weakness in Japanese stock prices prompted the initial surge of yen selling, Togawa said.

Today, losses on the Tokyo Stock Exchanges were curtailed when investors bought back blue-chip shares in the afternoon in the belief that selling Monday and early today had been somewhat overdone.

Stock investors also reacted positively to news that the finance minister would announce a set of measures to stabilize the stock market, traders said.

The benchmark 225-issue Nikkei Stock Average fell 60.44 points, or 0.40 percent, closing at 14,896.40. On Monday, the first day of trading this year, the average had lost 301.90 points, or 1.98 percent.

The broader Tokyo Stock Price Index of all issues listed on the first section fell 5.98 points, or 0.51 percent, to 1,160.65. It had fallen 8.40 points, or 0.71 percent, Monday.

Traders said earlier that the market likely would continue to fall in the near term without further government measures to boost the economy and stabilize Japan’s financial system.

At the first Cabinet meeting of the year, held today, Prime Minister Ryutaro Hashimoto pledged to stabilize the financial system and spur an economic recovery.

Volume on the exchange’s first section was estimated at 350 million shares today. Declines outnumbered advances 738 to 341, with 141 issues unchanged.

The yield on the benchmark No. 182 10-year Japanese government bond fell to 1.570 percent from 1.610 percent Monday, driving its price up to 109.81 yen from 109.52.

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