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Stocks Close Lower in Tokyo

March 27, 1998

TOKYO (AP) _ The dollar rose slightly against the Japanese yen today amid uncertainty over how much new spending was included in a fresh economic stimulus package proposal. Japanese stocks closed lower.

The dollar bought 129.09 yen in mid-afternoon trading, up 0.15 yen from late Thursday and also above its late New York rate of 128.29 yen overnight.

At the outset of trading in Tokyo, the dollar dipped on hopes a $124 billion stimulus package outlined Thursday by the ruling party would bolster economic growth, traders said.

But details of the plan remain sketchy and many market players bid the dollar back up on concern the proposed spending figure may include a large amount of money which has already been earmarked for public works projects, they said.

``When we heard about the 16 trillion yen plan we bought yen, but after we waited for a long time, and there were no (additional) details, the market understood that nothing has changed,″ said Takashi Nakauchi, foreign exchange manager at The Bank of Tokyo-Mitsubishi Ltd.

``We tested the downside, but common sense is to buy dollars,″ he said.

In Tokyo, the dollar fell as low as 127.78 yen and rose as high as 129.35 yen.

On the Tokyo Stock Exchange, the benchmark 225-issue Nikkei Stock Average slid 241.36 points, or 1.42 percent, to close at 16,739.26. On Thursday, the Nikkei index rose 322.28 points, or 1.93 percent.

Stock investors reacted negatively to the debut of the ruling Liberal Democratic Party’s stimulus plan because it did not include tax cuts which could boost the sagging economy, traders said.

The market rose in early trading on Japanese media reports that the ruling party had agreed to consider broad-based tax relief for possible inclusion in subsequent growth packages. But those gains were quickly eroded by lingering doubts the government will actually move to enact any large-scale tax cuts.

The broader Tokyo Stock Price Index of all issues listed on the first section lost 3.04 points, or 0.24 percent, to 1,258.55. The TOPIX closed up 24.88 points, or 2.01 percent, the day before.

An estimated 309 million shares changed hands on the first section of the Tokyo Stock Exchange, down from 402.11 million issues Thursday. Declining shares outnumbered gainers 638 to 471, with 133 issues closing unchanged.

Meanwhile, the benchmark No. 182 10-year Japanese government bond rose to 1.615 percent from Thursday’s finish of 1.550 percent, driving its price down to 109.23 yen from 109.71 yen the previous day.

Update hourly