Japan's economy stalls as another earthquake hits

A month after the earthquake in Japan, the country's economy has stalled in seven out of nine regions, according to the Bank of Japan.

Masaaki Shirakawa, the central bank's governor, said that while the earthquake would not bring down the country's already debt-ridden financial system, there was "strong downward pressure" on the economy.

Shortly before he spoke, another magnitude 7.4 earthquake rattled the Japan's north coast and shook buildings in Tokyo. The quake sent jitters through world markets, with the price of oil dropping and the yen rising against its most-traded currencies.

The Nikkei 225 declined 0.5pc to 9,719.7 points on the lowest volume of trading in three months after Citigroup downgraded Japan's auto sector from "buy" to "sell". Toyota, Honda and Nissan all saw their shares fall more than 2pc in value. The Nikkei has fallen 6.4pc in the month since the earthquake struck.

The Bank of Japan also marked out the auto sector as an area of particular weakness, as it downgraded its economic forecasts for seven regions. "Cautious views about the economy have become widespread in many regions, mainly reflecting setbacks in production following the Great East Japan Earthquake," said the central bank's regional economic report for April.

The widespread weakness was "mainly due to damage to production facilities, supply-chain disruptions, and constraints on the use of electricity," the report added. In order to provide liquidity, the central bank has doubled the amount of its asset purchase funds to 10 trillion yen (£72bn) and is to launch an emergency 1 trillion yen cheap loan programme to support reconstruction. (read more)