Asian stock markets lose ground

Japan's Nikkei index hit a 26-year low

Share prices in Asia have lost ground again as markets opened, following volatile trading throughout the world.

Japan's Nikkei index opened down 2%, falling below the 7,000 mark for the first time in 26 years, but recovered by lunchtime, down 0.95%.

Tokyo has said it will bring forward a ban on naked short-selling of stocks in an effort to stabilise markets.

In Australia, shares fell 1.7% in morning trade, while South Korea's Kospi dropped 2.6%.

But in Hong Kong shares ended the morning up 6.1%, although traders said this was to be expected after a 12.7% plunge on Monday.

Japan's Finance Minister Shoichi Nakagawa told reporters the ban on naked short-selling, which had been due to come into force on 4 November, would be brought forward.

The practice involves investors buying assets to sell on for profit without first confirming that they can secure the funds for the initial purchase.

The announcement follows similar moves by governments in the US, Australia and Europe.

"I decided on the measure because these few days will be critical and stock exchanges are facing risks unless we take quick action," said Mr Nakagawa.

"Japan was easily under pressure from other sources and that is why is was important to change the rules to US and European standards."

Yen warning

The US and Europe ended lower on Monday amid a growing belief that key economies are heading into recession.

The FTSE in London and Cac in Paris closed behind, with European indexes touching five-year lows during the day.

On Wall Street, the main Dow Jones index fell 2.42%, despite being boosted earlier in the day by a surprise rise in new home sales in September.

At close the FTSE in London closed down 0.79%, the Cac in Paris was down 3.96% but the Dax in Frankfurt was up 0.91%.

Earlier the FTSE had fallen 5.6% to 3,665 points - its lowest level since April 2003.

On the currency markets, Japan's yen has fallen back slightly after reaching a 13-year high against the US dollar on Monday.

That rise came despite warnings from the Group of Seven (G7) industrialised nations that the currency's strength was a threat to economic stability.

Mr Nakagawa said he would "continue to watch currency markets with great interest", while a government spokesman said they would consider whether there were "further effective measures" to be taken.

Economics Minister Kaoru Yosano told a news conference that the yen's rise was "astounding" but did not reflect Japan's economic fundamentals.

Meanwhile Japan's Prime Minister Taro Aso has said he will delay calling a general election in order to handle the economic crisis, reports Kyodo news agency.

Mr Aso, who took office a month ago, had been widely expected to call an early election to address the deep divisions in the Japanese parliament.
http://news.bbc.co.uk/2/hi/business/7694427.stm