JAPAN’S Nikkei surged six per cent in the first hour of trading this morning after the Bank of Japan (BoJ) intervened for a third time pumping another 3.5 trillion yen (£26.8bn) in same-day funds into the financial system in a desperate bid to ease liquidity after Tokyo suffered its worst two-day drop in 24 years.
The extraordinary action, which comes on top of seven trillion yen injected into its market operations on Monday morning and 8 trillion yen on Tuesday morning, came as the central bank tried to prop up asset values via short-term loans in the face of an escalating nuclear crisis and fears of unprecedented damage from the earthquake.
The escalating crisis at Tokyo Electric’s Fukushima nuclear plant and its impact on electricity supplies to Japanese business is creating huge concern among investors about the overall effect on the economy. Last night a fresh fire broke out at reactor 1 following on from an earlier blaze, but a spokesman for Tokyo Electric said it was under control.
Markets worldwide plunged yesterday after Japan issued an international alert following a third explosion at the nuclear plant in Fukushima and the Prime minister said the threat of nuclear contamination was rising.
In America, the Dow Jones industrial average fell by 137.74 points to 11,855.42, while London’s FTSE 100 sank 79.86 points to a 15-week low. Oil prices plummeted below $110 a barrel with traders fretting that an economic seizure in Japan would stifle demand from the world’s third largest economy, while the yen plunged, with the dollar pushing up to 81.10 yen.