BOJ Says Japan Economy Deteriorating ‘Significantly,

[Joanne98]

Feb. 20 (Bloomberg) -- The Bank of Japan said the world’s second-largest economy is worsening “significantly,” maintaining its evaluation in February after downgrading it the previous month.

“Japan’s economic conditions have deteriorated significantly,” the central bank said in a report in Tokyo today, using the most pessimistic language since 1998.

The Bank of Japan yesterday said it will widen the scope of its asset-purchase program to ease credit woes after the economy shrank at the fastest pace since the 1974 oil shock last quarter. Governor Masaaki Shirakawa said the outlook is “extremely uncertain.”

“The Bank of Japan will downgrade its assessment further because of this unprecedented deterioration,” said Mari Iwashita, chief market economist at Daiwa Securities SMBC Co. in Tokyo. “They will have to come up with more unconventional measures to help the economy.”

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Japan’s Topix Hits 1984 Levels Amid ‘Perfect Storm’

Feb. 20 (Bloomberg) -- Japan’s Topix stock index fell to the lowest since January 1984 as plunging demand and the strengthening yen decimated profits at the nation’s export- dependent companies.

“We’re in the middle of the perfect storm at the moment,” said James Salter, London-based director of Japanese equities at Polar Capital Partners, which manages $2.5 billion globally. “The inexorable link between exports and GDP hasn’t been broken, meaning the domestic economy hasn’t been self-sustaining.”

The Topix fell to 739.53 today, the lowest since Jan. 5, 1984. The gauge surpassed an Oct. 27 low of 746.46 reached during a credit crisis that caused the collapse of Lehman Brothers Holdings Inc. and sent banks including Bank of America Corp. and Citigroup Inc. scrambling for government support.

The Topix is a market capitalization-weighted average of all the stocks on the main board of the Tokyo Stock Exchange, akin to the U.S. Standard & Poor’s 500 Index. Japan’s Nikkei 225 Stock Average remains 3.4 percent from a 26-year low.

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