This Chronology of the crisis is based on information from several news sources (Reuters, AP, CNNfn, Wall Street Journal, New York Times, Financial Times, Bloomberg,etc.) 

Wednesday April 1.
  Stock markets throughout Asia lost ground on Wednesday as fears that the region's economic problems are deepening resurged and a last-minute dip on Wall Street overnight startled dealers.  Tokyo stocks ended weaker on Wednesday, erasing gains earned on the previous day as a result of what appeared to be government help and reflecting the weakness of the Japanese economy, brokers said.  The key 225-share Nikkei average fell 1.73 percent or 285.51 points to 16,241.66 on the first day of Japan's 1998/99 fiscal year. Nikkei June futures closed down 90 at 16,210. 
Turnover on the first section of the Tokyo Stock Exchange was 566 million shares, against 682 million shares on Tuesday.
"The Japanese economy is facing tough times and there is no clear, detailed scenario for its recovery. The share price fall today reflected such a state of the economy," said Okasan Securities strategist Akihiro Naemura.
"Usually, a new fiscal year starts in a bright mood with much hope. But 1998/99 started with triple weakness in stocks, bonds and the yen, although on a small scale," he added.
"The gains from window-dressing yesterday disappeared," Dai-Ichi Securities analyst Akishige Ishikura said, adding that the Nikkei may have fallen to a level which correctly represents the current weakness of the economy.
Gloomy media reports on Wednesday magnified investors' concerns over the future economy, particularly Japanese companies' financial health, while the yen fell to the 133.90 level, its lowest since mid-January.
Reports of a possible failure of non-bank Daiichi Corp. and major banks' plans to dispose of a huge amount of problem loans invited selling of bank, construction and other issues, they said.
Daiichi said after the market close that it had decided to prepare for dissolution and that its liabilities "significantly" exceeded its assets.
Investors also think that banks, to be weakened by the reported huge problem loan disposal, may cut their lending to firms in order to protect their health and, as a result some companies may face severe difficulties in raising funds.
"We may have to endure a weak market for some time," a trader at a foreign brokerage said.
The Bank of Japan's "tankan" quarterly survey of business sentiment to be released shortly before the market opening on Thursday is expected to be gloomy, brokers said.
  Hong Kong stocks closed sharply lower on Wednesday as end-of-quarter buyers dropped out of the market and regional economic worries loomed larger, brokers said.
A further adjustment in the Dow Industrials overnight would pull the index down further on Thursday, they added.
"We have just had a lack of buying today," Eric Lee, head of institutional sales at J&A Securities said. "The Japanese market has also been weak today with the end of the window dressing."
The Hang Seng Index sank 187.26 points, or 1.63 percent, to close at 11,331.42 but off the day's low of 11,291.78.
The index opened slightly lower and stayed submerged through the day as buyers and futures-related traders abandoned the market following the close of first quarter accounting books on Tuesday.
Turnover fell to HK$6.48 billion, down from Tuesday's HK$6.81 billion.
Most of the region's stock markets closed lower with Jakarta the hardest hit, down 3.7 percent to 521 ahead of its Wednesday close.
Brokers said they were concerned about Wall Street's late session adjustment on Tuesday and expected further weakness in the next session which could weigh on Hong Kong on Thursday.
The Dow Jones hit a session high of 8,898.96 then slid sharply to close just 17.69 points higher at 8,799.81
"And we could see Wall Street come down 100 to 200 points now that first quarter window-dressing is over," a local broker said.
Singapore's benchmark Straits Times Industrials Index (STII) ended 1.78 percent lower at 1,600.12 points on Wednesday after a sharp rally just before the close.
The unweighted 30-stock index reached an intra-day low earlier in the afternoon of 1,586.47, a drop of 2.6 percent.
"My guess is this close is artificial and it will come off again tomorrow," said one dealer. "Volume picked up as the prices fell in the afternoon. It's not looking that good."
Total market volume was 273 million shares with 352 falling and only 54 rising.

  Financial leaders of the Group of Seven industrial nations appeared to give little support on Wednesday to Japan's drive to bolster its weakening currency, saying it needed to reform its economy to solve its problems.  In a communiqué issued after their meeting, the G7 members welcomed steps taken by Japan to stimulate its economy, which would help to correct the excessive weakness of the yen. "We emphasized that it is important to avoid excessive depreciation where this could exacerbate large external imbalances," they said, echoing almost word-for-word a statement issued at their previous meeting in February. But in Wednesday's statement they added a sentence urging Japan to implement quickly a strong program of fiscal measures and structural reforms. "In light of this, we support appropriate steps by Japan aimed at stimulating domestic demand-led growth and reducing external imbalances, thus also correcting the excessive depreciation of the yen," they said, repeating exhortations made by several G7 finance ministers over the past few months.
The lack of strong verbal support for the yen helped to bolster the value of the dollar against the unit, with some dealers interpreting the statement as showing Tokyo may receive little help in propping up its currency.
Jens Munster at Westlb Research in Tokyo said: "My reading is that the story is we can still expect a stronger dollar...the Bank of Japan will stay in the game and will intervene, but I think we have heard it all before.
"It's a relatively noncommittal statement and the focus is on an orderly strengthening dollar," Munster said.
The G7 comprises the United States, Britain, Canada, France, Germany, Italy and Japan. Japan was the focus of this meeting, as the world's number two economy, and the communiqué noted that challenges facing it "are serious and have intensified in recent months."
In contrast, it said strong expansion continued in North America and in Britain.
The communiqué said growth in Germany, France and Italy "gained momentum in 1997 and is expected to strengthen further this year."
The G7 members said they welcomed progress toward restoring financial stability in crisis-wracked Asia and were encouraged by signs capital markets were being restored in some countries.
The communiqué urged Indonesia, now receiving a huge international bail-out, to move "fully and vigorously" to implement reforms.
 
    Nearly 14,000 union workers at South Korea's Kia Motors Corp. began a three-day strike Thursday, and hundreds blocked the company's court-appointed administrator from taking up his new post.  Production was halted on all Kia Motors assembly lines as workers downed tools to protest against the possible sale of the troubled automaker, union and company officials said.  Kia union president Ko Jong-hwan said the strike would continue until Saturday and the government would have until April 24 to state its position on a takeover.  "We are on full strike until Saturday," Ko told a news conference called by the Korean Metal Workers Federation, which includes the country's main auto-related unions.  "Unless the government makes clear by the 24th that it will rule out a takeover of Kia Motors, we will be forced to make a serious decision," Ko said without elaborating further.  "These strikes are a warning to the government against any takeover of Kia," warned Dan Byung-ho, president of the metal workers federation.
Separately, union members surrounded Kia Motors headquarters in Seoul's financial district to block the entry of Yoo Chong-yul, the man appointed administrator of Kia Motors by Seoul District Court on Wednesday.
Dozens of posters of Yoo were posted around the Kia building to make sure he did not sneak in, and workers chained and padlocked themselves to the doors. A scuffle broke out when Yoo tried unsuccessfully to push his way through.
"If he has come to Kia, we would like him to clearly state what his plans are," Ko said. "Is he coming to help with a takeover or to revive Kia? Until he clearly states this, we cannot let him in."
Seoul District Court put Kia Motors and sister company Asia Motors into receivership on Wednesday, and appointed Yoo administrator. Yoo said no decision had been made on whether Kia would be sold.
Kia workers had asked the court to also appoint company president Park Je-hyuk as an administrator to ensure the company's and workers' interests were represented during the receivership process.
Kia union members have said the appointment of an outsider to manage Kia during the receivership process was an indication of the government's intent to allow a takeover.
News of the strike sent Seoul stock prices tumbling. The composite index closed down nearly 3 percent at 454.15 points on Thursday.  "There are growing concerns that the Kia strike could blow into a nationwide strike," said Lee Kye-joon, a broker at Daishin Securities.
Kia workers were to rally in downtown Seoul in the afternoon, with additional rallies planned on Thursday, Friday, April 22 and May 1, the statement said.
Analysts said a takeover by a Korean automaker in partnership with a foreign automaker was inevitable and the best solution for Kia Motors and the country.
"A strike is the only way Kia's union can make its feelings known, but at the moment power is not in their hands," said Lee Jung-ja, head of research at HSBC James Capel in Seoul.
"Most South Koreans have changed their attitude and they know a takeover is best," she said.
The Hyundai, Daewoo and Samsung groups have either said directly they were interested in Kia or hinted at it.
The previous government's inability to resolve the problems of Kia Group, formerly ranked eighth among the country's big business conglomerates, is blamed for the country's foreign-exchange crisis. South Korea last December was forced to accept a humiliating $58.35 billion bailout from the International Monetary Fund after global bankers shut off credit lines and called in loans.

Friday April 17.
    Pacific Rim stocks ended substantially weaker on Friday due largely to growing pessimism over the likely effectiveness of Japan's upcoming stimulus steps to salvage the region's troubled economy, brokers said.  Prompted by market rumors, the dollar rose to above 132 yen in early afternoon, in turn pushing the Tokyo market's key Nikkei average sharply lower. But buying from sources that may be public funds quickly won back much of the lost ground. The 225-share Nikkei average closed down 1.13 percent, or 179.97 points, at 15,703.80. The index had fallen as low as 15,464.80 at one point in the afternoon.
Nikkei June futures ended down 100 at 15,750 after having at one point fallen as low as 15,470.
"Rumors moved the currency market, and the foreign exchange moves hit futures and then the cash market," said Yasuo Ueki, general manager of Nikko Securities.
Brokers said the yen's sharp fall came as an additional blow to the stock market, as investors were already pessimistic about the government's economic stimulus plans. A wide range of issues, including blue-chips, were sold, they said.
"We are becoming worried about whether the government's economic stimulus package will brighten prospects for the economy," said Okasan Securities chief strategist Tetsuya Ishijima.
The yen's drop was prompted by rumors circulating in the foreign exchange market that U.S. credit rating agency Standard & Poor's Corp. (S&P) was considering taking negative rating action on Japan, currency dealers said.
S&P later told Reuters it had taken no action on its Japan ratings.
Stock market investors have become increasingly nervous about currency movements, viewing yen falls as signals for possible sales of yen-denominated assets by the overseas investors who have recently been major players in Tokyo stocks.
A trader at an international brokerage said there had been sporadic large-lot selling by global investors.
Brokers said the Nikkei's losses were swiftly trimmed by buying on dips, possibly from public funds.
"It must have been public funds if it could boost the index that quickly," said one broker.
"They came into the market in a great hurry so that the Nikkei would not fall further," another broker said.
Turnover on the first section of the Tokyo Stock Exchange was 440 million shares, against 418 million shares on Thursday.
"The Nikkei may have fallen as a signal that the market wants to see meaningful measures, and we now have a slight hope that we may be able to see measures that will please the market," said Tokyo Securities general manager Kunihiro Hatae.
Hong Kong stocks dropped to a sharply lower close on Friday as investors' confidence was dented by a weak yen and shaky overseas markets, brokers said.
The Hang Seng Index came off earlier lows but ended Friday down 186.46 points, or 1.67 percent, at 11,001.32. The blue chip index fell as low as 10,876.00 during the day.
"We are very much stuck in a trading range which I would say is about 10,200 to about 11,700. I see no reason why we should break that range," said James Osborn, sales director at ING Barings. "I would argue fund managers are still very weighted to Hong Kong compared to the other markets."
Japan cast a bearish shadow over the market as brokers said investors feared the Tokyo stock market still had a substantial downside before it would stabilize.
Overnight losses on Wall Street and London helped to strangle any optimism. The Dow industrials lost 0.94 percent to 9076.57.
Turnover picked up to finish at HK$8.16 billion compared with Thursday's HK$6.98 billion.
Against the backdrop of a surging economy, the U.S. trade gap exploded to near-record levels in February as exports fell to their lowest level in a year, the Commerce Department reported.  The trade deficit expanded 4.2 percent to $12.11 billion from a revised $11.6 billion in January. Economists had estimated a deficit of $11.8 billion.
The February figure was the highest reading since the department began tracking the data on a monthly basis in 1992. However, the highest monthly average on a quarterly basis came in the fourth quarter of 1987, when the gap reached $12.9 billion.  "Finally you're starting to see some of the filtering of the Asian problems a few months ago in terms of swelling deficits with Japan," said Maria Ramirez, international economist.  With exports to Japan reaching a new three-year low, the trade gap with the world's second-largest economy rocketed 21.4 percent in February to $5.29 billion, the highest reading since October 1997. But the deficit with China eased 17.5 percent to $3.5 billion, a level not seen since April of last year.
The latest figures provide further evidence for American officials to increase pressure on Japan to revive their moribund economy. Treasury Secretary Robert Rubin won endorsement of this view at a meeting this week with America's six largest economic allies. But Japanese officials told the group they believe their new stimulus package of tax cuts and increased spending -- the fifth such program since last October -- will do the trick.
In an effort to deal with the trade deficit, Clinton administration officials have turned to Japan with hopes of transforming the island nation into the growth engine of Asia, which was hard-hit last year when countries such as South Korea, Thailand and Indonesia experienced severe currency devaluations.
To be sure, the trade gap with many of those countries did not get worse but actually improved in February. The deficit with Korea narowed 31.1 percent, while the shortfall with Indonesia shrank by 8.2 percent.
Other bright spots in the latest figures came in America's dependency on imported oil. Thanks in large part to a four-year low in crude oil prices, shipments plunged 16.2 percent to $4 billion in February.
Overall, imports totaled $89.12 billion while exports slipped to $77.01 billion. For the first two months of 1998, the deficit was running at an annual rate of $142 billion, far surpassing last year's nine-year high of $113.7 billion.
Meanwhile, President Clinton was forced to go to Santiago, Chile, this week without congressional authorization for new free trade agreements. His request for so-called fast-track authority is stalled in Congress by determined opposition from labor groups.

Friday May 8.
    The tone of Indonesian financial markets was tense Friday on renewed student protests in the capital and continued unrest and looting in cities in north Sumatra.  Students ignored a call from Indonesia's powerful military chief to halt their protests and staged a mock trial of President Suharto in Jakarta on Friday, condemned him to death and burned him in effigy. In the north Sumatra city of Medan, the scene of violent student protests for reform and riots over big fuel and electricity price hike, demonstrators denounced Suharto as the "Son of Satan" and demanded he be tried in the flesh by the Indonesian people. The rupiah recovered to a high of 8,750 per dollar from an opening of 9,450 before edging back down to 9,150 at the close. The stock market fell 2.12 points, or 0.49 percent, to 434.66.
A chorus of reform demands from establishment organizations grew louder with church leaders representing the nation's more than 10 million Protestants throwing their support behind the student protests. Earlier in the week, a leading Moslem intellectual organization urged wide-ranging reform.
The Sumatran violence flared after sharp hikes in fuel and transport prices took effect earlier this week, adding further misery to ordinary Indonesians already facing a wage freeze, rising unemployment and higher food prices.
But the rebound was mostly due to technical factors, notably offshore investors squaring off their long dollar positions ahead of the long weekend. Indonesian markets will be closed on Monday for the Vaisak holiday commemorating the birth of the Buddha.
Dealers said the rupiah market largely ignored a central bank rate hike of an average of 7.5 percentage points on Thursday, an IMF loan disbursement and the Friday start of talks in Tokyo about Indonesian debt.
"It's now the socio-political dimension which dictates the market. It takes some time to get this kind of problem under control," one local bank dealer said.
Dealers said the central bank rate hike was not sufficient to allow overseas investors to lock their money into high-yielding central bank paper because implied yields for swap rates were still much higher than the return.
"It's not enough to attract inflows in central bank papers because of increased risk-premiums for Indonesia," one said.
Market players were also concerned by President Suharto's planned trip to Egypt.
Suharto is due to visit Cairo from May 11 to 13 for a summit meeting of 15 developing countries, followed by a formal state visit to Egypt amid political and economic woes at home.
Currency dealers said the market was worried whether the government could maintain control of the worsening situation with Suharto away for so long.
Treasury Secretary Robert Rubin urged Indonesia to show restraint in dealing with social unrest, but the military has said it will be tough on protesters.
    Stocks in the Pacific Rim tiptoed cautiously on Friday as most investors remained on the sidelines on concerns over the health of local economies and corporations, but a few brave souls returned to the markets to hunt for bargains.  Tokyo's Nikkei average closed up a scant 0.04 percent or 5.97 points at 15,149.00.  "Investors took a wait-and-see stance ahead of the weekend after trading in various issues related to the May options settlement ended," a trader at a second-tier brokerage said.
Turnover on the first section was 285 million shares, against 176 million shares by midday on Thursday.
Market sentiment remained bearish due to the weak yen, strengthening of bonds and recent announcements of sluggish earnings by many companies, brokers said.
Despite the recent announcement of the largest-ever economic stimulus package by the Japanese government, the market mood has been deteriorating due to a combination of various negative factors, including social unrest and economic turmoil in Indonesia.
Brokers did not foresee positive market factors emerging soon. Instead, they expressed concerns about signs that overseas investors - key players in the Tokyo market - were fleeing.
"We cannot expect foreigners to be net buyers of Japanese shares in the near future," Nomura Securities strategist Masaaki Higashida said.
Market sources said orders placed through 10 international securities houses before the start of stock trading on Friday showed a net selling stance of seven million shares.
However, selling slowed in the yen market, with the Japanese currency advancing slightly to 132.76 to the dollar from its Thursday close of 133.035.
Hong Kong stocks regained some strength on Friday to close higher as investors covered short positions and started looking for bargains, brokers said.
The Hang Seng Index added 88.45 points, or 0.89 percent, to end at 10,060.38 after hitting a high of 10,095.62. It lost 503.3 points over the week.
"We have been down every day this week so the market got pretty oversold," said Howard Gorges, director at South China Brokerage.
Brokers said sentiment remained cautious with lingering concerns about a slowing local economy and developments in the region.
"A lot of people felt (the market) would go a lot lower so they continued to buy short positions," said Andrew Fernow, director of research at Vickers Ballas.
Frederick Tsang, strategist at BNP-PrimeEast Securities, believed the blue chip index may drop below 9,800 next week.
"The rebound should at least move close to 10,300 before meeting resistance, but the market actually failed to break 10,000," he said.
Monday was expected to be relatively quiet as markets in Thailand, Singapore, the Philippines and Indonesia are closed for holidays.
Singapore stocks closed softer on Friday as investors avoided trading, choosing instead to evaluate the fragile political situation in neighboring Indonesia before a long market weekend.  Dealers and analysts had said that the riots and demonstrations across Indonesia this week have ended any chance of a quick rally in Singapore shares.
"Looking forward, there is now further downside for Singapore," said Jeffrey Teo, institutional sales manager at Santander Investment in Singapore. "The hedge funds are selling. They were selling yesterday and are still doing so today."
Singapore's benchmark Straits Times Industrials Index (STII) fell 7.75 points, 0.5 percent, to 1,420.75 on Friday, days after riots and shootings began in the Indonesian city of Medan, which lies a few hundred miles northwest of Singapore. The Medan riots followed sharp rises in fuel and transport prices, which were a condition of a $40 billion economic rescue package agreed with the International Monetary Fund.  Elsewhere in the region, Indonesian and Malaysian stocks both closed flat before the long weekend. Indonesia's Jakarta composite index closed down 2.12 points at 434.65, while Malaysia's KLSE closed down 6.78 points at 580.05.

Investors were also worried about the chaos in Indonesia as many Japanese firms, particularly banks and trading houses, have begun to suspend business operations there while Japanese businessmen and their families flee the country to escape the riots. 

The political upheaval in Indonesia is unnerving investors in markets as far away as Russia, Brazil and Mexico, arousing fears the deepening economic troubles in Asia could become global in scope. Russia's main stock index plunged nearly 12 percent yesterday amid mounting speculation that the Russian economy is becoming the latest emerging market to suffer a serious loss of investor confidence. Share prices in Latin America followed suit, with Brazilian stocks falling 6.4 percent, Mexican stocks tumbling almost 3 percent and Argentine stocks declining 4.7 percent.  "You could call this round two -- a second round of financial contagion," said Gene Frieda, senior Latin American economist at I.D.E.A., an economic consulting firm.

 Market participants said international investors have grown increasingly jittery about emerging markets in recent days. While the withdrawal of foreign funds won't necessarily escalate into a full-fledged panic, they said the situation bears a worrisome resemblance to the autumn of 1997. Then, the Hong Kong market crashed after a period of relative calm, sending South Korean and Indonesian markets into downward spirals that forced those countries' governments to seek massive bailouts from the International Monetary Fund.

 "It looks to some degree like what we had last October, because as the Asian crisis deepens, it's focusing market attention on other countries that don't have particularly good fundamentals -- and Russia would clearly fall into that category," said Desmond Lachman, head of emerging-market economic research at Salomon Smith Barney.

 Fueling the anxiety is the outbreak of rioting and virtual breakdown of the economy in Indonesia. Although the Indonesian economy is relatively modest in size, the country's population of 204 million is the world's fourth-largest; chaos there threatens its neighbors because its 13,000 islands straddle sea lanes vital to Asian commerce. Moreover, the looting and violence has provided a shocking reminder of the wrenching social adjustment facing the region's other ailing economies.

 Most Asian markets fell yesterday, continuing a recent downward trend that reversed rallies earlier this year. Share prices were off 4.2 percent in Indonesia, 2.1 percent in Singapore, 3.8 percent in Thailand, 2.9 percent in Malaysia, and 1.3 percent in Hong Kong, where the Hang Seng index closed at its lowest level since Jan. 27.

 Japanese stocks rose for the first time in three days, as did Korean stocks, but both countries' markets remain near their lows for the year. The Japanese yen hit a a 6 1/2 year low against the U.S. dollar, falling to 136.25 yen per dollar.

 The declines in Asia were soon overshadowed by frenzied selling in Russia, where investors have been growing increasingly skeptical about the ability of President Boris Yeltsin's government to maintain a stable value for the ruble. Yesterday's 12 percent fall came on top of an 18 percent decline since May 5.

 No particular event lies behind the market's intensifying pessimism, analysts said; rather, the markets are simply focusing more on evidence of the government's weak financial position. Russia has a dwindling supply of foreign currency reserves, which at $16 billion appears to be less than adequate to ensure that the country can continue to pay its foreign obligations.

 "You've just got fundamental weaknesses in the economy that the markets ignored in a more benign environment and that they are now pouncing on," said Lachman. "The Russians are the ones really under the gun now."

 A collapse in the Russian economy would pose even more disturbing problems for the Clinton administration than the Asian crisis, since Moscow is a nuclear power. The IMF, which has provided Russia with a $10 billion, three year loan package, has been wrangling with the Yeltsin government over how to cut the nation's budget deficit.

 Late yesterday in Moscow, in a dramatic move that is sure to please the IMF, the government raised a benchmark interest rate to 50 percent from 30 percent. The higher rates are designed to provide investors with attractive enough yields to keep their money in the country. But many analysts said it is far from clear the economy will be able to withstand the sharp increase in the cost of borrowing for very long.

 Economists generally agreed that Brazil is better able to withstand the selling pressure that hit its markets yesterday. The Brazilian government, which holds about $75 billion in reserves, established considerable credibility with investors during a period of instability late last year by raising interest rates to high levels and holding them there until the markets settled down.

    The International Monetary Fund (IMF) has come under fire for making a bad situation worse in Indonesia but analysts say Jakarta has little choice but to rely on the fund, no matter who rules the troubled nation.
Indonesian President Suharto, bowing to domestic and international pressure, resigned Thursday.
 Vice President Jusuf Habibie immediately took his place, but analysts questioned how long the controversial Habibie could stay in power.
 A danger remains that tough reforms mandated by IMF bailouts in South Korea and Thailand could spark similar political unrest in those nations, although greater progress toward political reform is expected to help avert Indonesian-style turmoil there.
 Hailed as a savior when Indonesia turned to it for help last October, the IMF since has come under heavy criticism for setting too-strict terms for its assistance and for failing to adapt its traditional prescriptions to the special requirements of Asia's economies.
 "In Indonesia, the method and timing of the broad structural reform policies included in (IMF) conditionality was too hasty and complicated the problem," an advisory panel to Japan's finance minister said in a report issued Tuesday.
 The IMF masterminded a $40 billion-plus rescue deal for Indonesia last October but twice had to revise the economic reform program linked to the bailout.
 Fund defenders, however, say that while some criticism of the content of harsh IMF prescriptions is valid, an ossified Indonesian political system built up during President Suharto's 32-year rule must bear most of the blame for the current chaos.
 "When the crisis hit last year, the political system wasn't able to respond," said Bruce Gale, Singapore manager of Hong Kong-based Political and Economic Risk Consultancy.
 Economic collapse after years of booming prosperity ignited growing dissatisfaction with the inequalities and rigidities of Suharto's regime, triggering the 76-year-old leader's downfall.
    The IMF said Wednesday it could no longer meet a June 4 target to pay its next loan installment and would have to reassess the economic assumptions underpinning the program.
 Ultimately, though, Indonesia will have no alternative to relying on the IMF to help it out of its economic woes.
 "Even a new government won't blame the IMF because they are going to need IMF support, and lots of it," Gale said.
 Habibie was quoted Thursday as saying he could honor all commitments with the IMF and continue promised reforms.
 Analysts said the fund's reaction and the nation's worsening economic crisis would be key factors in determining how long Habibie stayed in power.
 "It all depends on the economic situation. If there is no improvement in the economic situation and the IMF will not release the funds, then it will be very difficult no matter who comes up," said Hilman Adil, director of the Center for Social and Cultural Studies in Jakarta.
The overseas investment community has reacted with distaste in the past to Habibie's free-spending and unorthodox economic views.
 "The IMF has actually specified some of Mr. Habibie's projects for condemnation in its reform program at various times," Gerry Van Klinken, professor at Sydney University, told RTV, adding the IMF was unhappy with Habibie's approach to economic policy when he was research and technology minister.
IMF officials in Tokyo declined comment Thursday.
 But the World Bank said it was ready to resume operations in Indonesia as soon as the capacity to carry out economic reforms returned.
 "We will be moving quickly in close collaboration with the IMF to restart operations as soon as we have a sense of the emerging players here," Dennis de Tray, the bank's director in Indonesia, said, adding the first priority for Jakarta was to form a credible and competent cabinet.
Risk remains, meanwhile, that Thailand and South Korea could suffer more social unrest and political instability as they move to implement more reforms agreed on with the IMF.
 "At times when the economy is in recession there is always the risk of social unrest, and the risk that that will spill into political instability for countries like Korea and even Thailand can't be ruled out," said Rob Subbaraman, an economist at Lehman Brothers Japan Inc.
 Still, Seoul and Bangkok are seen as better positioned to avoid turmoil on an Indonesian scale.
 "The strength of South Korea and Thailand is that they basically have governments in power that people have a certain degree of confidence in, and there is an agreed mechanism by which these governments can be held accountable," Gale said.

    Financial markets throughout the Pacific Rim rejoiced on Thursday as investors took Indonesian President Suharto's announcement that he would resign as a sign that political tension in Jakarta may soon ease.
Tokyo's key 225-stock Nikkei average rose 192.30 points, 1.23 percent, to close at 15,845.25.
It had risen as high as 15,972.88 in the morning, but lingering worries about the future of the Indonesian economy pulled the average back downward later in the session.
Nikkei June futures ended 280 points higher at 15,870.
"Indonesia managed to avoid disorder for now, but it is hard to think that everything (in the country) will go well," said Hiroshi Arano, general manager at Dai-Ichi Kangyo Asahi Asset Management Co. Ltd.
In his speech on Thursday, Suharto said he has decided to resign immediately, ending a 32 years in power to hand over his position to Vice President Jusuf Habibie.
"Even though Indonesia's political crisis is over, its economic stagnation isn't over yet, and that would affect Japanese companies' business there," said Ryoji Musha, Japanese equity strategist at Deutsche Morgan Grenfell Capital Markets Ltd. "It will take time for Indonesia to regain stability as power struggles will continue."
There are widespread expectations in the market that the 15,000 level in the Nikkei average will be solid because a number of Japanese firms have announced stock buyback plans this quarter and also because of expectations that Japan will tackle long-standing bad loan problems, brokers said.
"The amount of shares companies are planning to buy back has already reached 2.3 percent of last year's trading volume on the Tokyo bourse," Arano said. "Share buybacks will continue to provide strong support to the market."
The yen also improved drastically on the news, leaping against the dollar to 134.96 from 136 levels on Wednesday.
Hong Kong stocks closed higher on Thursday as buyers returned to the market, nerves calmed by the news from Indonesia.
The Hang Seng index rallied 121.27 points, 1.27 percent, to close at 9,670.45 after hitting a high of 9.725.11.
HSBC Holdings dominated the market as investors looked for renewed exposure in Hong Kong and covered short positions.
HSBC gained HK$4.50 to HK$204.00 and accounted for nearly a quarter of the day's HK$7.21 billion turnover.
Stronger markets elsewhere in the region and lower local interbank rates improved sentiment further. The benchmark 3-month HIBOR rate dipped to 6.92188 percent at Thursday's fixing against 7.0000 percent at the same time on Wednesday.
"What we need to hear now is talk of interest rate cuts, either in Hong Kong or China," said Steven Thompson, chief analyst at Nikko Research Center (HK).
Financial issues surged to lead the Malaysian market to a strong finish on Thursday as investors were cheered by the Suharto news and indications that the Malaysian banking sector will be cleaned up.
The Kuala Lumpur Stock Exchange's key Composite index was up 24.43 points, 4.29 percent, at 593.62.
In Singapore, stocks also climbed, gaining 45.87 points, 3.60 percent, to end the day at 1,319.65.
The Indonesia market was closed for the Ascension Day holiday.
 

    A banquet of bad news dragged stocks throughout the Pacific Rim sharply lower on Wednesday, with brokers paying special heed to a dramatic decline in South Korean and Hong Kong markets and new weakness in the yen and other local currencies.
In Tokyo, U.S. credit rating agency Moody's Investors Service's mid-afternoon announcement that it had downgraded five top Japanese banks also pressured stocks.
The key 225-share Nikkei average closed down 1.39 percent, or 220.53 points, at 15,664.29. Nikkei June futures closed down 280 points at 15,600.
Turnover on the first section of the Tokyo Stock Exchange was 322 million shares, against 278 million on Tuesday.
"Sharp falls in Seoul share prices are the main reason for the Nikkei's fall," said Yasuo Ueki, general manager of Nikko Securities.
"There is no fresh selling factor, but the yen's weakness, strong bonds and the drop in Wall Street stocks overnight have made investors unwilling to buy shares," a trader at a second-tier brokerage said.
Share prices fell in New York and the dollar soared against the yen on Tuesday, amid expectations that Asia's economic turmoil may spill over into the earnings of U.S. multinational firms.
The Dow Jones Industrials slid 150.71 points, or 1.65 percent, to close at 8,963.73. The dollar briefly shot up as high as 138.02 yen in New York. On Wednesday morning the dollar was quoted at 137.64 yen.
The Korea Stock Exchange's composite price index ended narrowly in the black, up 1.49 points or 0.48 percent at 313.48 on Wednesday after hitting an 11-year low on Tuesday amid concern about planned labor strikes and further corporate failures.
As well as lowering the ratings of five top Japanese banks, including Bank of Tokyo-Mitsubishi Ltd., Moody's also said it might cut the ratings of four other Japanese banks.
Hong Kong stocks were hammered to a sharply lower close on Wednesday as investors fretted about the local economy after Hong Kong leader Tung Chee-hwa warned of negative growth in the territory, brokers said.
The Hang Seng Index dived 498.78 points, or 5.26 percent, to 8,983.43, its lowest close in four months.
"There is no support. The next level is 8,800, and whether it can hold or not we have to wait and see how Wall Street performs tonight," said Alex Tang, head of research at Core Pacific Yamaichi International. "If Wall Street continues to move lower, the market might come down again."
The weak yen, Wall Street's overnight losses and softer regional markets dragged the market lower and brokers said sentiment remained poor.
"I am definitely convinced that throughout the summer we will go much lower than 8,800 and we will probably even go towards 8,500 short-term," said Johan Tellvik, sales director at Caspian Securities.
Turnover picked up to HK$8.00 billion (US$1.03 billion) compared to Tuesday's quiet HK$3.63 billion.
Falling futures spurred the bears of the market ahead of the expiry of the Hang Seng Index contract for May on Thursday.
"The discount is telling us that people are still very negative in Hong Kong," said David Williamson, director at Indosuez W.I. Carr.
The May contract slid 535 points to 8,880 with open interest at 28,534 contracts while the June contract shed 600 points to 8,775 with open interest at 57,043 contracts.
Market focus was on the government's first quarter economic report, due on Friday, after Hong Kong announced a 12 percent drop in the value of March retail sales on Tuesday.
Hong Kong chief executive Tung Chee-hwa said on Tuesday the territory could see negative growth as it goes through a major economic adjustment.
"The growth of (the) economy will fall substantially and indeed may even be negative," he said.
Singapore shares were weaker on Wednesday, with trade choked off by poor economic news spreading across Asian stock and currency markets.
Dealers said fear of another bout of currency volatility had gripped the market and was keeping investors away.
"The thinking is that there will be another sell-off in the region," a trader said, noting regional currencies were under pressure from the yen while Asian equity markets were down.
The key Straits Times Industrials Index (STII) ended 17.26 points or 1.31 percent lower at 1,295.53 on overall market volume of a meager 43.6 million shares.
Indonesian stocks dropped nearly 4 percent, 17.09 points, to close at 416.96. Malaysian stocks sank 9.00 points, 1.6 percent, to 416.96.

 Stock markets in Asia and Australia ended mixed on Thursday as a rebound in South Korean stocks and a firmer yen relieved Japanese investors but economic fears elsewhere drove other Pac Rim markets to continue their sell-off.
In Tokyo, the key 225-stock Nikkei average ended up 0.84 percent, or 132.26 points, at 15,796.55.
Turnover on the first section of the Tokyo Stock Exchange was 313 million shares against 322 million shares on Wednesday.
"Negative factors that pulled down Tokyo share prices yesterday disappeared today," said Yasuo Ueki, general manager at Nikko Securities.
Buying back of shares increased, encouraged by share price rises in South Korea.
The Nikkei average lost more than 220 points on Wednesday, mainly due to the yen's weakness and tumbles in markets in South Korea and elsewhere in Asia.
South Korean stocks, which plunged in recent sessions amid concern about planned labor strikes and further corporate failures, shot up more than 3 percent due to a rebound in blue-chip issues.
The dollar had climbed as high as 138.02 yen earlier this week in New York but was trading around 137.20 yen in Tokyo.
Despite the slight gain in the Nikkei, investors lacked reasons to actively buy shares on Thursday in a Tokyo market overshadowed by Japan's economic gloom and its bad loan problems, brokers said.
Economic data announced by the government and the Bank of Japan on Thursday -- for Japan's industrial production in April, domestic wholesale price index in the second 10 days of May and diffusion index of leading economic indicators in March -- all showed that the economy is still in bad shape, although they did not have a direct, significant impact on Tokyo share prices.
  Hong Kong stocks closed Thursday weaker after concerns about the local economy sent the market on a rocky ride, and brokers said sentiment remained poor.
The Hang Seng Index fell 105.49 points, or 1.17 percent, to end at 8,877.94 after hitting a high of 9,066.79. The blue chip index tumbled 498.78 points, or 5.26 percent, on Wednesday.
"There is still a lot of fear that the economic problems are going to put a lot of pressure on corporate earnings," said Andrew Fernow, director of research at Vickers Ballas.
The May futures contract was up 88 points at 8,968. The June contract added 35 points to 8,810 with open interest at 80,053 contracts.
The failure of the market to bounce back in late trade ahead of the May futures expiry on Thursday indicated selling pressure had not subsided, brokers said.
"I would not be surprised to see the market come down to near 8,000, but around 8,000 the support is very strong," said Percy Au-Young, sales director at DBS Securities.
Singapore shares traded lower on Thursday, depressed by mounting worries that economic strains in Asia would inflict more pain on local companies.
Dealers said fresh cracks in the South Korean and Hong Kong economies this week sapped market liquidity again.
"Korea is dragging regional confidence down. The key point is that funds are not confident being here," a local dealer said.
The key Straits Times Industrials Index (STII) ended 33.91 points or 2.62 percent lower at 1,261.62.
Indonesian stocks dipped 2.74 points to end at 414.22, while in Malaysia stocks fell 7.54 points, 1.37 percent, to 544.74.

    Pacific Rim stocks ended the week with a sigh of resignation on Friday after unsettling economic data in both Tokyo and Hong Kong and a rising dollar discouraged investors from actively buying shares.
In Tokyo, the key 225-stock Nikkei average closed down 0.80 percent, or 125.77 points, at 15,670.78.
Turnover on the first section of the Tokyo Stock Exchange was 346 million shares against 313 million on Thursday.
"Investor sentiment was hit by the sluggishness in the economy and the situation in Asia," said Kunihiro Hatae, general manager at Tokyo Securities.
"The market lacked fresh incentives after moving due to the dollar's rise," Nikko Securities general manager Yasuo Ueki said.
The dollar rose above 139 yen in early Tokyo trade due to rising tension in South Asia after Pakistan conducted nuclear tests on Thursday. It was trading around 138.70 in Tokyo late Friday.
Investors see the yen's fall as a sign that overseas investors may continue to be fleeing the Japanese stock market due to a reduction in the value of their yen assets.
The release of data showing Japan's jobless rate hitting a record high of 4.1 percent in April worsened market sentiment, Daiwa Securities' deputy general manager Kenji Karikomi said.
"The jobless data will hit household spending and cool the economy in turn," said Masaaki Higashida, deputy general manager at Nomura Securities.
  Hong Kong stocks ended with a show of determination on Friday in a market otherwise seized with nervousness as investors awaited first quarter economic data.
As the market closed, the government announced that gross domestic product shrank two percent in real terms in the first quarter of 1998.
The Hang Seng Index closed with a gain of 56.62 points, or 0.64 percent, at 8,934.56. Turnover fell to HK$5.06 billion compared with HK$7.30 billion on Thursday.
"The market was trapped very much in a nervous band as people awaited the results of the GDP report," said Miles Remington, sales trader at SG Securities.
The index lost 621.42 points, or 6.5 percent, this week.
"I think people will start discounting further bad news," said Robin Fox, head of research at DBS Securities. "A recession is two quarters of contraction and there is quite a good chance that we will see a technical recession."
The GDP contraction for the first quarter of 1998 was the first quarterly contraction in Hong Kong in 13 years. The government said on Friday its 3.5 percent growth forecast for 1998 looked unattainable but had no revised figure.
"It looks as though it will be bad in the second quarter as well," said Fox.
The Singapore stock index closed lower on Friday, weighed down by uncertainties in Indonesia and Asian currency weakness.
"People who are not long-term holders will want to take any rebound in prices to sell," a local dealer said.
She said reports Indonesian students were protesting again in Jakarta for President Jusuf Habibie to step down were unsettling.
Singapore's key Straits Times Industrials Index (STII) ended 6.69 points or 0.53 percent lower at 1,254.93.
Malaysian stocks also ended lower, shedding 6.5 points, 1.19 percent, to 538.24. However, Indonesian stocks chalked up their first gain in a week, adding 6.24 points, 1.51 percent, to end at 420.46.

    Indonesia's new government took more steps Friday to begin the long process of reform after 32 years under ousted President Suharto's autocratic rule. The country's top economics minister announced sweeping reforms, as the former president's son and son-in-law resigned from their posts at one of the country's richest corporate giants.
Ginandjar Kartasmita, coordinating minister for economics, finance and industry, said the government had will implement reforms of investment procedures to cut bureaucracy and increase transparency.
"These are big steps, we can say they are sweeping reforms in investment rules. We expect this move will improve the investment climate in Indonesia to attract investors," Ginandjar told reporters after a meeting with President Jusuf Habibie.
We will cut bureaucracy and make transparent the criteria for granting tax holidays in a move to boost non-oil exports," Ginandjar said.
In the future, approvals for foreign investments of below $100 million would be signed by the investment minister. Approvals for investments over $100 million would still be signed by the president.
"Licenses for foreign investment will be issued under one roof at the investment ministry, although some of them can also be handled by regional investment offices," Ginandjar said.
Former President Suharto's second son, Bambang Trihatmodjo, resigned as president director of diversified conglomerate Bimantara Citra, one of the country's largest corporations, and Indra Rukmana, married to Suharto's eldest daughter, quit as president commissioner.
The Suharto family, which personally controls a lion's share of Indonesia's economy, is worth and estimated $40 billion. Indonesians believe most of the family's fortune was acquired through nepotism, and want its assets and cash returned to the country.
Although removed from the immediate management of the company, the pair remain Bimantara's biggest shareholders. Bambang owns more than 38 percent of the company and Rukmana about 14 percent.
Some 20 protesters chanted and sang songs outside the company's building demanding the Suharto family surrender their assets.
Several Suharto-linked companies have suffered since he handed power to his protege and deputy, Jusuf Habibie, on May 21, in the wake of widespread protests against his long rule
President Habibie, who has promised a complete revamp of electoral laws and new elections as soon as possible, ordered Thursday that a special session of the People's Consultative Assembly (MPR) will be called late this year or early in 1999 to approve changes in electoral law which will have to precede the polls.
The 1,000-member MPR, which includes the 500 members of parliament and nominated civilian and military officers, is the nation's top decision-making body.
The MPR, which usually meets once every five years, last held a session in March this year during which Suharto was named to a seventh consecutive five-year term and Habibie was chosen his deputy.
Constitutional experts have said the MPR needs to approve the changes in laws.
Indonesians elect the MPR through a complex voting system, in which candidates are assigned to parliamentary post. There have been suggestions that the country should switch to a district, or constituency, system of parliament.
Although the intense violence of the past weeks has subsided, the Jakarta Post reported Friday a riot in the North Sumatran town of Tanjungbalai, 90 miles southeast of the regional capital of Medan. The turmoil left one man dead and 14 people injured and damaged hundreds of shops, the paper said.
Witnesses were quoted as saying thousands of people went on the rampage, angered by gambling, prostitution, smuggling, drinking and nepotism in the town. Two bank branches were damaged and a small hotel was gutted by fire.
The paper said unrest had also broken out in the town of Jeneponto in the south of the island of Sulawesi. It said around 100 high school students had attacked shops and buildings. Police detained 50 students but later released them.
Meanwhile, the regional representative of the International Monetary Fund said Thursday the fund would consider whether its US $41.2 billion bail-out for Indonesia was still enough to rebuild the shattered economy in the wake of sweeping civil unrest.
Hubert Neiss, here to review economic and political conditions after Suharto's ouster last week in the wake of riots in Jakarta, told reporters it was too soon to judge if more money would be needed.
"In time, a team of the IMF will come here and assess the whole situation, will discuss every aspect of the economy with government officials and then an assessment will be made of whether the available financial support is adequate," he said.
After meeting Habibie earlier on Thursday, Neiss said the country's problems were so extensive that there would be no quick fix for its battered economy.
Speaking to reporters after an hour-long meeting with Habibie, Neiss said the political unrest that led to the ouster of president Suharto last week had made the country's recovery efforts even more difficult.
But he said that although his mission to Indonesia was not yet over, he had already determined there would be positive elements in his final report.
Neiss is in Jakarta until Saturday to review the nation's situation since Suharto's downfall and prepare a report that is likely to be decisive in the IMF's decision whether or not to resume aid.
The IMF has suspended disbursements of a $10 billion balance-of-payments loan, the central plank of a $41.2 billion rescue package crucial to getting the beleaguered economy back on its feet.

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Tuesday June 2.
Pacific Rim stocks had a generally easier time Tuesday as bargain hunters stepped into the breach left by the sharp descent the day before to bolster stock prices somewhat, although economic worries and a feeble yen still kept many would-be buyers on the sidelines.
Tokyo stocks bounced back on Tuesday, with the 225-stock Nikkei average finishing up 233.42 points, or 1.52 percent, at 15,554.45. Turnover on the first section of the Tokyo Stock Exchange (TSE) dwindled to 290 million shares from the 331 million traded on Monday.
Nikkei June futures rose 80 points to end at 15,410.
"The market will continue to consolidate, as many companies have not factored in possibly negative economic growth in Asia for the later half of this year," said Hiroyuki Nakai, general manager at Nikko Securities Investment Trust and Management Co.
The stock market was overshadowed by anxiety over the economy, with the yield on the key Japanese government bond falling to a record low of 1.125 percent on Tuesday afternoon.
Some said stability in Wall Street stocks overnight helped short-covering. On Monday, the Dow Jones industrials closed up points, or 0.25 percent, at 8,922.37.
Nikko Securities Co. Ltd. extended Monday's gains, after it and Travelers Group of the United States a capital alliance on Monday. Shares in Nikko were up 36 yen at 518, topping the list of actively traded issues on the TSE's first section.
The yen's weakness against the dollar gave a modest lift to some export-based shares like Sony Corp., brokers said. The dollar remained firmer at 139.46/50 yen at mid-session, against 139.12/17 yen in late Tokyo trade on Monday.
 The yen's decline was keenly felt in South Korea, where stocks lost well over 3 percent, 12.60 points, to end at 324.10 in heavy overseas selling.
Hong Kong stocks erased most of their earlier heavy losses to close Tuesday only a touch weaker, but concerns about a shrinking economy and a weak yen continued to dog the market, brokers said.
The blue chip Hang Seng Index closed down 13.84 points, or 0.16 percent, at 8,598.17. It had earlier hit a low of 8,351.11, or 267.56 points down, before investors stepped in to cover short positions and look for bargains, brokers said.
Turnover shrank to HK$5.53 billion against Monday's HK$6.52 billion with derivatives-linked trading to a large extent leading the market, they said.
    In Singapore, stocks ended lower as recent concerns over the worsening health of the neighboring Indonesian economy were borne out by data released Tuesday.
After news that Indonesia's economy was likely to contract 10.1 percent this year, stocks on Singapore's Straits Times Industrials index fell 2.23 percent, 27.47 points, to 1,207.12.
Indonesian stocks fell 14.48 points, 3.5 percent, to close at 399.59. 

Wednesday June 3.
    Markets in the Pacific Rim parted ways on Wednesday, with Tokyo stocks gloomily ending moderately lower while Hong Kong stocks rallied as investors hunted for bargains.
Tokyo's Nikkei 225-stock average was down 207.45 points or 1.33 percent at 15,347.00. Nikkei June futures lost 100 points to finish at 15,310.
Turnover was still light at 358 million shares on the first section of the TSE. Tuesday's volume was 290 million shares.
"The market was pretty much quiet except for hedge sales by domestic institutions," said Hiroshi Masuya, deputy manager of the securities investment department at Mitsui Marine and Fire Insurance Co. Ltd. "While the market lacked fresh factors, Nikko and Daiwa continued to attract attention."

"Thin trading volume exaggerated sales," said Tetsuya Ishijima, chief strategist at Okasan Securities Co. Ltd.
Many investors were sidelined because the impact of political and economic turbulence in Asia on Japan's corporate earnings is still unclear, Ishijima said.
The dollar stood at 138.43/48 yen in late Tokyo trade on Wednesday, against 139.49/54 yen in Tuesday's late Tokyo, boosted by speculation that the G7 nations might agree to support it as they meet next week.
 Hong Kong stocks rebounded on Wednesday as buyers returned to the market for bargains after recent steep falls, and inspired by a rebound in the Japanese yen, brokers said.
The Hang Seng Index rose 221.05 points, or 2.57 percent, to 8,819.22 after hitting a high of 8,915.29. Turnover was largely unchanged at HK$5.72 billion against Tuesday's HK$5.53 billion.
However, some brokers said concerns about the local economy still kept investors on edge.
"Likelihood is that it is purely a reaction to the fact that the market has fallen so much over the last two months," said Miles Remington, sales trader at SocGen-Crosby Securities. "I think we will be testing low levels in the foreseeable future."
Hong Kong Monetary Authority chief executive Joseph Yam was cited as suggesting there might be negative growth for the 1998 second quarter, following last week's announced first quarter drop of 2.0 percent.
"If you define a recession as negative growth in two successive quarters . . . it seems we may see it," Yam was quoted by the South China Morning Post as saying during a London visit on Tuesday.
Singapore shares were mostly steady in quiet dealings on Wednesday.
Dealers said the mood was cautious with investors waiting for a clearer direction in the market. Property stocks did recover some ground after two days of heavy selling, they said.
"The (Straits Times Industrials) index did dip below 1,200 this morning, mainly because of Inchcape, but now it is back up. But the upside it going to be limited," a dealer with a Singapore brokerage said.
At the close, the benchmark index was up 12.68 points, 1.05 percent, at 1,219.80. Total market volume was a light 57 million units.
Dealers said wider market sentiment was better because regional currencies were slightly firmer on the back of the stronger yen.
The Australian share market shed early gains to close mainly weaker on Wednesday as continued concerns over Asia and unclear directions from U.S. markets held investors back. "Apart from a better gold price -- and that looks temporary -- there was little reason to buy today," one broker said.  Early futures-led buying pushed the All Ordinaries index to a peak of 2,685.9 before it drifted down to close 9.1 points lower at 2,662 on turnover of A$720 million (US$442.8 million).  "Sentiment is still a bit fragile," said David Perry, head of research at Austock Brokers.

Thursday June 4.
Major Pacific Rim stocks closed mixed on Thursday, with utility bargain-hunting and merger speculation piercing the gloom for Japan stocks, while in Hong Kong economic worries pushed equities nearly 3 percent lower.
Tokyo's Nikkei 225-stock average was up 79.47 points or 0.52 percent at 15,426.47. Nikkei June futures had climbed 110 points to end at 15,420.
Turnover continued to fall, dwindling to 277 million shares traded on the Tokyo Stock Exchange's first section from 358 million shares on Wednesday.
"The Nikkei 225 was lifted by a constant influx of money from cash-rich pension funds," said Kiyoshi Kimura, general manager at Societe Generale Securities.
Investors sought undervalued stocks in the utility sector, where earnings are not affected by weaker consumption, traders said.
The Japanese government's Management and Coordination Agency said on Thursday that spending by Japanese households in April fell 2.1 percent from a year earlier to an average of 337,308 yen per household.
The yield on the benchmark Japanese government bond continued to fall, reaching a record 1.140 percent late in the session.
Brokerage houses continued to gain attention. Daiwa Securities Co. Ltd. topped the list of most actively traded issues, followed by Nikko Securities Co. Ltd.
Speculation about new alliances in the industry was fueled by an announcement earlier this week of a tie-up between Nikko Securities and Travelers Group of the United States.
"Investors will continue to pick up a limited number of issues, and the Nikkei 225 average will drift within a 500-point range for now," said Tsuyoshi Segawa, general manager at New Japan Securities.
The yen took a breather on Thursday, trading at above 138 against the U.S. dollar, as traders awaited a G7 (Group of Seven industrialized nations) meeting next week to see if the group would announce any program to support the yen.
Hong Kong stocks closed Thursday sharply lower as worries about a shrinking economy continued to gnaw at the market and brokers said a mood of caution reigned.
The Hang Seng Index shed 260.79 points, or 2.96 percent, to 8,558.43 in the shadow of Wall Street's overnight losses. Turnover dropped to HK$4.51 billion from Wednesday's HK$5.72 billion as investors stepped to the sidelines.
"The index is reflecting a bearish sentiment on the economy," said David Williamson, director at Indosuez W.I. Carr.
Gains made on Wednesday on the back of short-covering were erased on Thursday but brokers said derivatives-linked trading continued to set the tone.
"It just sort of reminds everybody that the possibility that there is going to be a big short squeeze at some point is legitimate," one broker said.
Singapore shares also ended sharply lower on Thursday, failing to sustain early buying momentum from Wednesday's late afternoon rally.
Dealers said trading was thin with block trades seen in several counters including Singapore Telecom, ST Engineering, Dairy Farm and NatSteel.
"Most of the married deals were done at yesterday's prices," a dealer with a Singapore brokerage said. "A lot of punters who want to go for a quick trade are waiting to sell."
The benchmark Straits Times Industrials index closed down 32.06 points, 2.63 percent, to 1,187.74.
The Australian share market ended Thursday off its early U.S.-led lows as bargain-hunters went stock-picking among the blue chips in slow afternoon trade.  The All Ordinaries index closed 3.6 points down at 2,658.4 after bouncing from a low of 2,642 on very thin turnover of A$595.7 million (US$363.3 million).
"It's just flat really ... there is a bit of a trend for a downward drift, but the market is actually proving fairly resilient," said Andrew Sekely, head of equities at Intersuisse.  Brokers said underlying sentiment remained cautious with investors keeping wary eyes on the Asian economic downturn's impact on both the domestic economy and corporate earnings.  "I suspect that with the Asian problems starting to bite, the only thing that would give the market a significant fillip would be a combination of (a good rise on) Wall Street or lower interest rates and maybe a significant (upturn) for commodity prices," Sekely said.

Friday June 5.
 Increasing pessimism over the health of Pacific Rim economies pushed regional stock markets adrift on Friday, with most major indices caught in a downward trend by corporate doubts and currency worries.
Tokyo stocks finished moderately lower as worries over Japanese company bankruptcies, triggered by the failure of port harbor transport firm Mitsui Wharf Co. Ltd. were exaggerated by speculation about banks' financial troubles, brokers said.  The 225-stock Nikkei average was down 103.04 points, or 0.67 percent, at 15,323.43. Nikkei June futures closed 110 points lower at 15,310.
Despite active trade in a limited number of stocks, the overall volume remained light. On the TSE's first section, turnover was 290 million shares, against 277 million shares traded on Thursday. Losing issues outpaced gainers 656 to 424, while 180 issues were unchanged.
"Market sentiment was dampened by the sell-off in the banking sector," said Masatoshi Sato, manager at Kankaku Securities Co. Ltd.
Long-Term Credit Bank of Japan Ltd. (LTCB) closed down 18 yen or 9.05 percent at 181 and was the most heavily traded issue on the first section of the Tokyo Stock Exchange (TSE).
The sales were touched off by a report in a monthly magazine that said the bank was in poor financial health. LTCB said late Friday morning that the article was groundless and it would sue the magazine.
Active sales spread to other banks. Fuji Bank Ltd. was down 45 yen to close at 605 and Bank of Tokyo-Mitsubishi Ltd. was down 30 yen at 1,365.
"What irritates us most is that it is hard to find out the truth (on Japanese firms' financial health)," said Ritsu Matsushita, director at Invesco Asset Management (Japan) Ltd.
Some brokers said sales in bank shares were touched off by the news about Mitsui Wharf as investors feared that an extended string of corporate bankruptcies could hurt the already-fragile banks.
Mitsui Wharf said on Friday that it had filed for protection from creditors at a court in Yokohama with debts totaling 20.37 billion yen. The shares were ask-only at 50 at the end of Friday's session, against Thursday's 100.
Concern about the health of Japan's banks also encouraged yen selling across the board, with traders watching for signs of renewed weakness in the currency as it fell to trade at above 139 against the dollar.
Hong Kong stocks closed Friday largely unchanged as cautious investors clung to the sidelines.
The Hang Seng Index added 11.04 points, or 0.13 percent, to end at 8,569.47. Turnover shrank to a slim HK$3.48 billion from an already low HK$4.51 billion on Thursday.
"We are very much in the middle of a range but with a great deal of nervousness," said Miles Remington, sales trader at SG Securities.
Caution remained the market watchword for the near term and brokers said concerns about a shrinking local economy continued to weigh on sentiment.
"There is a liquidity problem in the market," said Eugene Law, director at Lippo Securities.
The capitalization of the Hong Kong stock market fell 38 percent to HK$2,538.79 billion at the end of May from the same date a year earlier.
Singapore shares drifted lower in thin dealings on Friday, led by selling of bank stocks.
Dealers said market sentiment was weak after the benchmark Straits Times Industrials index (STII) broke support at 1,200 on Thursday and overnight gains on Wall Street did little to lift the downward selling pressure.
"Some people had hope the Wall Street gains would help stop the slide, but it looks like the selling is continuing," said a dealer with a Singapore brokerage.
At the day's end, the STII was down 19.28 points, 1.62 percent, at 1,168.46. Total market volume was light.
Australian shares closed down on Friday after drifting lower for most of the day as the market weighed central bank action on the embattled local dollar.
The All Ordinaries Index lost 15.6 points or 0.6 percent to close at 2,642.8. The benchmark index had spent a lifeless early period in a four-point range before dipping lower in the hour before the market closed for a long weekend.
Australian financial markets are closed on Monday for the Queen's Birthday holiday.
Falls heavily outnumbered rises on total value of A$639 million (US$387 million). Since last Friday's close the All Ordinaries has lost 72.9 points or 2.7 percent to today's level.
Dealers and fund managers said the market was still digesting the ramifications of a candid speech by Reserve Bank of Australia (RBA) governor Ian Macfarlane in London overnight.
Macfarlane confirmed the RBA had intervened to support the Australian dollar on Thursday, effectively pitting the central bank against U.S. investment banks.
    The Australian dollar plunged to a fresh 12-year low on Friday, raising fears of a full-blown currency crisis and interest rate hike as the central bank aggressively defended the unit.
The Reserve Bank of Australia (RBA) has spent at least A$1.0 billion (US$610 million) in the past 24 hours, buying Australian dollars in the face of heavy selling by U.S. investment banks and hedge funds, dealers said.
"It's an Armageddon scenario," David de Garis, senior treasury analyst at the Australia and New Zealand Banking Group Ltd (ANZ) said on Friday.
"The Reserve Bank may have to hike (rates) to stop the Australian dollar becoming a casualty like the (South Korean) won or (Malaysian) ringgit," de Garis told Reuters.
"The domestic fundamentals are not ringing any alarms, but the dollar surely is."
The Australian dollar hit a 12-year low in tense Friday afternoon trade as a retreat in the yen reminded the market of the dangers abounding in Asia.
The local dollar sank to 60.60 U.S. cents by mid-afternoon, surpassing its offshore low of 60.70 cents, despite talk the Reserve Bank was standing in the market to defend the currency. That was well down on Thursday's 61.55 high.
In part the Australian dollar was following the yen which skidded past 139.00 per U.S. dollar on U.S. fund buying and rumors Japanese Prime Minister Hashimoto might be mixed up in a financial scandal.
On Thursday, the RBA intervened aggressively to rescue the currency from a 12-year low of 60.70 U.S. cents, as investment banks and hedge funds sold massive amounts of local dollars.
But the spending spree bought only temporary relief and the central bank was believed to be standing alone in the market on Friday buying the Australian dollar under 61 U.S. cents.
So intense was the pressure on the dollar that RBA governor Ian Macfarlane took the unusual step of confirming the bank's intervention in the market in a speech in London on Thursday, declaring the currency market had over-reacted. "A significant fall in the exchange rate as we have had was always going to be part of the adjustment to this external shock (from Asia), but an overshooting would be in no-one's interest," Macfarlane said.
The Australia dollar has been unhinged by the country's trade exposure to Asia, which has already seen the country's current account deficit balloon by 33 percent in the first quarter of 1997/98.
Since last May, when the Asian economic crisis first grabbed headlines, the Australian dollar has declined by no less than 16.5 U.S. cents or 21 percent, partly in response to this deterioration.
The Australian dollar has only been down at these levels once before, and then only briefly, when it plunged from around 67 U.S. cents in May 1986 to an all-time low around 57.20 U.S. cents in July.
Macfarlane also took the opportunity to quash speculation of an Australian interest rate cut, which has been undermining the dollar in recent weeks. He said an easing was "very unlikely" and offered a stout defense of Australia's economy.
But none of this seemed to carry much weight with the big currency speculators in the United States.
"Ever since the market forced sterling out of ERM back in 1992 it has reasoned that if it could roll the Bank of England then it could roll anyone," said a dealer at an Australian bank.
In 1992, worldwide selling of sterling forced it out of the Exchange Rate Mechanism (ERM) of the European Monetary System, despite all-out intervention by the Bank of England and two hikes in interest rates. One hedge fund alone, run by well-known speculator George Soros, made nearly a billion U.S. dollar profit.
    Dealers said the profit-motive was clearly behind the Australian dollar's present difficulties, but noted beating the RBA would be easier than the Bank of England because of its smaller foreign exchange reserves. The RBA's foreign exchange reserves stand at around A$20 billion -- a sum any respectable U.S. hedge fund could raise with a few phone calls.
Hedge funds represent many of the world's biggest individual investors and have access to billions of dollars of credit.
"The market will be quietly adding up what the RBA spends, waiting for it to run low on ammunition," said J.P. Morgan senior economist John Kyriakopoulos.
Analysts fear the currency will revisit all-time lows around 57.20 cents if it cracks the psychological 60 cent level.
But Australia's central bank is not afraid of a fight.
Rory Robertson, a fixed income analyst at Bankers Trust Australia, said the RBA had been prepared to put its reserves on the line in the past.
"We know that the last time they were concerned the currency had overshot, in the period between late 1991 and late 1993, they actually did A$18 billion of buying," he said. "So they do have a lot of money they're prepared to throw at it.

Monday June 8.
    The battered yen slid to 140.73 to the dollar in Tokyo morning trade on Monday, its lowest level in seven years.
The U.S. currency was quoted at 140.57/62 yen at the Tokyo market close. Traders said the currency was dragged down by persistent worries about the Japanese economy and the health of its banking sector.
The yen's fall triggered declines in other Asian currencies, including the Malaysian ringget, the Thai baht and the South Korean won, and pushed the Taiwan dollar to an 11-year low.
Japanese Vice Finance Minister Koji Tanami responded by pledging Tokyo would "act decisively" against excessive yen weakness, but Prime Minister Ryutaro Hashimoto said all Japan could do was "closely monitor" currency moves.
"There's a bit of doubt about what the game is at the moment," said Richard Jerram, chief economist at ING Barings.
"Do they really want the yen to stop going down? Do they really think it's overshooting? Do they really think the weak yen is going to hurt Asia and do they really care?" Jerram said. "It's not entirely clear."
Some economists argue the yen's slide helps Japan, bringing the promise of higher exports to the United States and Europe.
"The biggest problem Japan has right now from the cyclical perspective is a massive inventory overhang and the only way they can solve that is through an export drive to the economies of Europe and the United States," said Jesper Koll, chief economist at J.P. Morgan in Tokyo.
Others, however, counter that many of the benefits to Japan are offset by domestic negatives, while the fresh blow to Asian currencies and economies will end up hurting Japan as well.
Gone, for example, are the days when the boost from a weaker yen to exporters' profits automatically spelled a shot in the arm for the broader economy, said Robert Feldman, chief economist for Japan at Morgan Stanley.
"The weak yen benefits some individual companies but it's not likely that...will spur any extra investment in exporting industries, so one of the channels of yen transmission to a stronger Japanese economy is cut off," he said, adding that firms importing goods, meanwhile, would see their costs rise.
"Even the incremental addition to export volume from a weaker yen may not be so high, because a lot of that's already been done," Feldman said. "Although some will benefit, those who lose will probably lose more."
Japan's weak demand means companies are unable to pass on higher import prices and so are seeing margins squeezed, said Susumu Kato, chief economist at Barclays Capital Japan.
And while Japanese exporters have gained a competitive edge from the yen's fall against the dollar, they have lost out against other Asian currencies, economists said.
"If the yen's fall meant higher exports and hence recovery, it would be a plus, but the yen is still strong against other Asian currencies, so it's not a plus at all," Kato said.
In addition, the weakened state of other Asian economies means shrinking demand for Japanese goods in a region which until recently accounted for 40 percent of Japanese exports.
Further falls in Asian currencies and a worsening of the economic troubles in the rest of the region would boomerang back on Japan's own shores, economists said.
"If Asian economies worsen, Japanese exports will decrease. And if you consider the chain reaction between a weakening yen and Asian currencies, a further weakening is not good for Japan," said Hisashi Yamada, an economist at the Japan Research Institute.
Regional concerns do weigh heavily on the minds of Japanese authorities just now, Kosuke Nakahira, a former vice finance minister for international affairs, told Reuters.
"It (a rapidly weakening yen) is not good for the Asian recovery, certainly. Japanese authorities are worried about it," said Nakahira, now an adviser to the Institute for International Economic Studies, a think-tank owned by Toyota Motor Corp.
At precisely what yen level the risk of competitive currency devaluations -- by China in particular -- becomes real, however, remains a big question. "That's the level the market is trying to test," said Barclay's Kato
    Currency queasiness was the keynote for Pacific Rim markets on Monday as the yen slipped below the crucial 140 barrier against the dollar and other regional currencies fell in sympathy, knocking stocks to a flat to sharply lower close.
"The yen's fall will definitely benefit exporters, but people were worried that overseas investors may not resume buying Japanese stocks unless the yen stops falling," said Kokichi Kumagae, a manager at New Japan Securities Co. Ltd.
Tokyo's Nikkei average of 225 leading stocks was down 28.72 points, or 0.19 percent, at 15,294.71. On the TSE's first section, turnover dwindled to 251 million shares, against 290 million shares traded on Friday.
Nikkei June futures finished 10 points higher at 15,320.
The dollar rose above 140.00 yen -- its highest level since June 1991 -- in Tokyo on Monday. The U.S. currency was quoted at 140.57/62 yen at the Tokyo market close.
The weak yen continued to support some exporters such as Sony Corp., which was up 110 yen at 11,420, and Citizen Watch Co. Ltd., which was up 12 yen at 1,099, but the gains were limited, brokers said.
Investors were cautious ahead of a Group of Seven (G7) deputy finance ministers' meeting in Paris on June 9 and 10. Some analysts said if G7 nations would not jointly support the yen, it could hurt other regional currencies and stocks.
  Hong Kong stocks ended Monday largely unchanged after a choppy session that saw investors worried about the weak yen but encouraged by strong major overseas markets, brokers said.
The Hang Seng Index added 17.16 points, or 0.20 percent, to end at 8,586.63 after bouncing between a low of 8,424.22 and a high of 8,666.25.
Turnover remained quiet at HK$4.55 billion against Friday's HK$3.48 billion as cautious investors stayed on the sidelines waiting for firmer market direction.
Singapore's key share index sank more than 3 percent on Monday, depressed by a gloomy domestic economic outlook and fears of a fresh round of currency devaluations.
"There is no confidence that things are going to get any better for the region's economies in the short term and that's hitting shares," a dealer with a local firm said.
Blue chips were the heaviest casualties of Monday blues with banks, property counters and conglomerates bearing the brunt of selling which sent the Straits Times Industrials index (STI) tumbling 39.89 points, or 3.41 percent, to 1,128.57.
The grim mood was set by UOB chairman Wee Cho Yow, who said in a newspaper interview there could be a recession next year if the government did not take evasive action now.
Wee's prognosis compounded fears of a fresh round of regional currency hits after Singapore Senior Minister Lee Kuan Yew said that continued depreciation of the Japanese yen against the U.S. dollar could push China into devaluing the yuan.
Dealers said there were concerns the Singapore dollar could slip heavily against the U.S. dollar if that happened.
"The Sing (dollar) has already gone through S$1.70 and is making the stock market even more jittery," another dealer said.
Australian markets, also recently shaken by currency worries, were closed for observance of the Queen's Birthday holiday. The Australian dollar continued to drop, reaching 1.6584 to the U.S. dollar. The Australian dollar plunged towards an all-time low on Monday after U.S. and other hedge funds renewed their speculative attack, forcing the currency through the crucial 60 U.S. cent level.
The local currency closed at a fresh 12-year low of 59.71/76 cents and is expected to trade even lower when the full Australian market restarts on Tuesday after Monday's public holiday, dealers and economists said.
The U.S. dollar's rise through 140 yen on Monday triggered the latest selling assault by large and mostly U.S. funds, they said.
"A lot of analysts have been looking at 58 cents as a likely target in the short term," said one senior Sydney dealer.
"The Australian dollar may well get down to 57-58 U.S. cents -- that's highly likely," said ANZ Bank chief economist Saul Eslake.
The Australian dollar had opened in New Zealand at 60.8 cents, supported by a rumored bout of intervention by the Reserve Bank of Australia (RBA).
But that strength proved fleeting and appeared only to pique the interest of the large speculative sellers that have pummeled the unit over the last week.
"The currency doesn't really have a friend in the world at the moment," said Bankers Trust Australia executive vice-president Lucio Febo.
Although the Australian market was officially on holiday, some Sydney dealers came into their trading rooms.
"It's becoming less a fundamental trade than a sentiment-driven trade and people are looking for a proxy for Asia," Febo said.
The Australian dollar fell to an intra-day low of 59.57, not far from the 57.20 all-time low reached in July 1986.
This 1986 low came after then-Treasurer Paul Keating warned about the dangers of Australia becoming a "banana republic" because of a blowout in its current account deficit.
The currency's plunge through 60 U.S. cents raised the prospect of the Reserve Bank being forced to hike official cash interest rates just to support the currency and stave off new inflationary pressures, dealers and economists said.
The RBA's massive intervention over the last week, put at close to A$3 billion ($1.8 billion), is generally seen as having failed to prop up the local dollar in the face of the huge speculative selling.
The RBA had US$14.7 billion in reserves at the end of April.
"The failure of the RBA, either to take the Australian dollar above US$0.6000 or continue to defend it will raise grave concerns about the outlook for the Australian dollar," said Societe Generale Australia analyst Glenn Maguire.
"The risk then becomes that the Aussie could accelerate to the 1986 low. It would be in this situation that the RBA would be in the entirely unenviable position of having to decide whether or not to lift the cash rate to defend the currency," he said.
Colonial State Bank's manager of foreign exchange Peter Whitley said: "Under these circumstances the RBA is really up against it."
"The sentiment is so negative based on the region and the Aussie dollar is being picked out by the funds because there is liquidity to get in there and to get out," said Whitley.
"We are really under attack like those Asian currencies were six to nine months ago," he added.
Some said the RBA should resist a defensive rate hike because it would dent the economy at a time when the region's economic prospects were uncertain.
"I would think caution in pulling out the heavy artillery would be well advised. It's not the RBA's fault. There's not a lot they can do about it," ANZ's Eslake said, adding a 100 or 200 basis point rate hike would cut GDP growth to under two percent.

Tuesday June 9.
    The yen continued its seemingly inexorable decline on Tuesday, pulling Pacific Rim stocks down with it, but the Tokyo stock market advanced as export-driven manufacturers found new strength, brokers said.
The 225-stock Nikkei average soared 235.46 points or 1.54 percent to close at 15,530.17. Nikkei June futures finished 170 points higher at 15,490.
Turnover on the first section of the Tokyo Stock Exchange grew to 314 million shares from 251 million on Monday.
"The weaker yen will help earnings of Japanese exporters," said Kiyoshi Kimura, general manager of the research department at Societe Generale Securities Ltd.
But buyers have recently been limited to Japan's cash-rich pension funds, as other domestic investors stayed sidelined due to fears that the yen's downward trend could trigger a selloff by overseas investors, Kimura said.
The dollar rose towards 141 yen in early Asian trade on Tuesday, reflecting short-term capital outflows from Japan, where the economy is still in prolonged sluggishness. The U.S. currency was quoted at 140.51/61 yen at the Tokyo market close.
Brokers said they were keen to see how foreign investors will react to the yen's renewed weakness, as it should raise the currency risk in their Japanese portfolios holdings, but would also make fresh purchases of yen-based assets cheaper.
    Hong Kong stocks closed sharply lower on Tuesday in a rain-struck shortened session that saw buyers spooked by the weaker Japanese yen, brokers said.
The Hang Seng Index lost 195.17 points, or 2.27 percent, to 8,391.46 after hitting a low of 8,347.98. Brokers believed the market has further downside in the short-term.
Mainland China companies suffered the largest setbacks. The red chip China-Affiliated Corporations Index slumped 8.52 percent to 934.92 while H shares lost 6.80 percent to 455.30.
"There are not a lot of reasons to buy right now," said Kent Rossiter, institutional sales manager at Nikko Securities. "People overseas seem to be extremely negative and about as underweighted as they can be on Asian equities."
Trading was called off on Tuesday morning by the Stock Exchange of Hong Kong after a "black" storm warning of torrential rain. The signal was later replaced by the less severe red warning, enabling trading to resume in the afternoon.
Turnover finished at HK$3.28 billion against HK$4.55 billion for the whole of Monday and Monday afternoon's HK$2.06 billion.
    Singapore shares lost ground late Tuesday as strength in the banking sector failed to lift the overall market, dealers and analysts said.
The Straits Times Industrials Index ended the day at 1,117.21, down 1.01 percent or 11.36 points.
Singapore's Deputy Prime Minister and Monetary Authority chairman, Lee Hsien Loong, had detailed bank reforms on Monday, including raising bank disclosure and encouraging mergers, as part of a move to make Singapore Asia's financial hub.
    The Australian share market ended lower on Tuesday as overseas gains were offset by fears that local rates may be hiked to defend the ailing currency.  "The uncertainty itself is enough to keep people away. The upside isn't big enough for investors to take too many chances at the moment," one senior dealer said.  The All Ordinaries index ended 18.9 points down at 2,623.9 after peaking at 2,649. Turnover was a moderate A$734.9 million (US$441 million).
 
    Japan's "Mr. Yen" on Tuesday met U.S. Deputy Treasury Secretary Lawrence Summers and other senior financial officials but all kept silent on the one thing financial markets are watching for -- whether rich nations are ready to act to prop up the Japanese currency.
Japan's Vice Finance Minister for International Affairs Eisuke Sakakibara, along with other senior officials at the so-called Working Party III, representing 11 countries, declined all substantive comment as they ended a day of talks at the Organization for Economic Cooperation and Development.
Summers and Sakakibara then went together to a separate building, apparently for bilateral talks, but emerged 40 minutes later barely leaving markets any the wiser.
"No comment," Summers repeated to waiting reporters. Asked whether this meant he was not at all worried about the yen, he said, "I didn't say that."
Senior officials from the Group of Seven had been expected to meet on the fringes of the Working Party III talks, amid intense market speculation about whether the G7 club of rich nations was ready to act to support the yen, hovering around seven-year lows against the dollar.
Federal Reserve Board Vice Chairwoman Alice Rivlin said only that, "We had a Working Party III meeting," as she left Tuesday's talks. Asked whether that meant there had not yet been a meeting of senior officials from the G7, she said, "Right."
The G7 nations are the United States, Canada, Japan, France, Germany, Italy and Britain.
The exact timing and location of a meeting of G7 deputies was being kept secret. But officials suggested it could now be on Wednesday.
According to monetary and diplomatic sources, deputies from the G10 -- actually 11 countries including G7 members plus Switzerland, Sweden, the Netherlands and Belgium -- were due to meet Wednesday morning.
The G10 forum is usually attended by both deputy finance ministers and deputy central bankers.
Officials have been playing down expectations that the Paris talks would produce any significant verbal support for the yen, which weakened above 141 per dollar overnight after Summers said before leaving Washington that there would be no policy statement after the meetings.
But markets have, nonetheless, held off from selling the Japanese currency too aggressively until the Paris meetings are out of the way.
The regular talks of the Working Party III, and those of G7 deputies, are usually held in secret, with no press access or final statements. Officials said much of Tuesday's session was devoted to an overview of the economic situation worldwide.
Officials had said before the Paris talks that they expected financial turmoil in Russia to dominate the discussions.
But in contrast to comments from the United States, Japanese officials have been encouraging the view that the Paris meeting would review currency movements.
"Although Russia will be the main issue, media reports that they will not discuss currencies are not correct," Japan's Finance Minister Hikaru Matsunaga told reporters in Tokyo earlier.
"We have strong worries over an excessive yen weakness," Matsunaga said. "We will take decisive measures as needed in cooperation with the G7 nations."

Wednesday June 10.
Stocks throughout the Pacific Rim fell on Wednesday as tumbling currency exchange rates highlighted market worries that the region's year-old economic woes may be deepening into recession.
In Tokyo, the 225-stock Nikkei average lost 190.91 points or 1.23 percent to close at 15,339.26. Nikkei June futures finished 150 points lower at 15,340.
On the first section of the Tokyo Stock Exchange (TSE), turnover was 353 million shares against 314 million traded on Tuesday.
"What is worrying us most is the selloff in Asian stocks. Since the yen kept on weakening against the dollar, stocks are likely to suffer more," said Hiroshi Masuya, deputy manager of Mitsui Marine and Fire Insurance Co.'s securities department.
The dollar rose above 141.00 yen in Tokyo on Wednesday and was standing at 141.28/38 yen at the market close against 140.37/47 yen in late Tokyo on Tuesday.
Japan's banks were hit hard, partly due to the possible impact on their bottom line from economic turbulence across Asia, and to a cloudy outlook for the domestic financial industry. The bank woes placed downward pressure on the Nikkei average, brokers said.
"Bank shares dropped as investors unloaded their shareholdings amid worries that more Japanese banks would suffer from mergers, buyouts, and restructuring in the future," said Kenji Karikomi, deputy general manager at Daiwa Securities Co. Ltd.
Brokers said shares in the banking sector were vulnerable to sales after shares in Long-Term Credit Bank of Japan Ltd. (LTCB) were pounded down on Tuesday due to speculation over the bank's financial health.
LTCB's shares closed 4 yen lower at 163, topping the list of most actively traded issues on the first section.
Hong Kong's Hang Seng Index was knocked back to its lowest close in more than three years on Wednesday as the weak yen sent investors on a selling spree, brokers said.
The Hang Seng Index ended down 412.09 points, or 4.91 percent, at 7,979.37, its lowest close since March 10, 1995.
China plays were hit hard and the China-Affiliated Corporations Index shed 5.08 percent to 887.41 while H shares dived 5.60 percent to 429.81.
China's central bank governor, Dai Xianglong, said on Tuesday the weak yen was having a severe impact on Beijing's foreign trade and brokers said the soft yen sparked concern about the strength of the Chinese yuan.
"Our current view is that the renminbi is relatively safe although there is a risk element of the yen," said Robert Sassoon, head of research at SG Securities. "If the yen does depreciate -- if it goes beyond 150 -- then we will obviously review the situation."
Asian currencies suffered a fairly severe thrashing as markets fretted about the yen, and most other regional stock markets were hammered lower.
In Thailand, stocks plunged more than 5 percent while share prices in Seoul lost more than 4 percent.
The Hong Kong dollar weakened below the key support of HK$7.75 against the U.S. dollar at one point before bouncing back to HK$7.7483/93 in late trade.
Singapore shares were sharply lower on Wednesday as fears of more regional woes depressed the market, dealers said.
The Straits Times Industrials Index ended down 4.42 percent, 49.40 points, at 1,067.81.
"Stronger worries about the yen and its potential domino effect on the other Asian currencies are taking a toll on the market. It has been a very quiet morning," lamented one dealer.
"The concern is, if the yen keeps falling, can the Chinese renminbi be sustained at current levels? Will the Hong Kong dollar-peg falter as well?" said another dealer.
The Australian share market ended Wednesday broadly lower as talk of an interest rate hike grew louder after the latest dip in the ailing local currency, now looking set to test all-time low levels.
The All Ordinaries index ended down 31 points or 1.2 percent at 2,592.9, on high turnover of A$1.02 billion (US$592 million).
"The continuing concerns over the dollar … are still dictating the nervousness of the market," broker Tony Russell of Morgan Stockbroking said. "Asian markets are all weaker as well, and that is adding to our malaise."
The Australian dollar hit a new 12-year low of US$0.5815 before recovering marginally, and has fallen almost three percent from Tuesday's local finish.
"If the consensus is that our dollar is going to go weaker, then you'll find overseas funds selling our market down hoping to buy it back at a cheaper currency price," Russell said, but added the outlook was not all doom and gloom.
The market "might get a bit weaker yet, but you must consider that it's becoming very good value," he said.
Stocks have fallen over 10 percent since the All Ordinaries index hit an all-time high of 2,893.7 on April 16.
    Deputy finance ministers from the Group of Seven industrial nations discussed the yen's weakness and Russia's troubled markets Wednesday, but the meeting had no apparent effect on markets.
The officials, who met in Paris, sought to calm financial markets by maintaining general silence amid a media storm over the yen and Russia. The group's only comments came from U.S. Deputy Treasury Secretary Lawrence Summers, who made an innocuous statement after the meeting,
"In conversations that I have had while in Paris, the situation in the foreign exchange markets has been a part of discussions of the global economic situation," Mr. Summers said.
He added that "certainly the kinds of concerns that the Japanese finance minister and [U.S. Treasury Secretary Robert] Rubin have discussed in the past regarding the weakness of the yen and the consequences of yen weakness for Asia and the global economy have been highlighted in those discussions." Mr. Summers also said that "as always we will continue to monitor developments in exchange markets."
The statement broke little ground, analysts said. The yen, which has sunk to seven-year lows against the dollar this week, was flat after Mr. Summers' remarks.These comments didn't advance the Japanese situation, one economist said, adding there was no reason they should have. "It is very rare for anything of note to come out of a deputy meeting. Significant policy statements, if they appear at all, usually come from full-blown G-7 meetings," said Gwyn Hacche, senior European economist at HSBC James Capel in London.
Regarding discussions on the Russian financial situation, Mr. Summers said the G-7 countries agreed to support the 1998 International Monetary Fund-backed program and that they are ready to consider additional aid "as necessary and appropriate." The G-7 countries are the U.S., Canada, Japan, Britain, Italy, France and Germany.
The Russian stock market wasn't affected by Mr. Summers remarks, having already slipped after its opening as expectations for a new G-7 aid package fell.
Russia's 1998 economic program developed with the IMF includes important commitments with respect to fiscal, monetary and structural policy, Mr. Summers said, repeating comments he made in Washington on June 4.

Thursday June 11.
    The spiraling yen and weakness in other regional currencies drove Asian and Australian markets lower on Thursday as economic worries added downward momentum to already-embattled stocks.  In Tokyo, banking shares were dealt a severe blow by concerns that Asia's turbulence may add to bad loans of Japanese banks, already saddled with massive debts. The dollar briefly jumped above 142.00 yen in late Tokyo trade Thursday, the first break above 142.00 since June 1991.  The 225-stock Nikkei average finished the Thursday session down 2.12 percent or 325.22 points at 15,014.04, just above the key support line of 15,000.
On the first section of the Tokyo Stock Exchange (TSE), turnover grew to 418 million shares from 353 million shares traded on Wednesday.
"The Japanese stock market suffered psychological damage from Asia," said Ritsu Matsushita, director at the asset management department of Invesco Asset Management (Japan) Ltd.
But the fact that banks still have a huge amount of bad loans was also behind the selloff in bank shares, traders said.
"Unless banks deal with their bad debts, they will continue to see investor sales," Matsushita said.
Shares of major Japanese banks tumbled in heavy volumes. Sakura Bank Ltd. lost nine yen to end at 377, Long-Term Credit Bank of Japan Ltd. was down five yen at 158, Bank of Tokyo-Mitsubishi Ltd. shed 66 yen to end at 1,276, and Sumitomo Bank Ltd. was down 61 yen at 1,205.
Patrick Mohr, a strategist at Merrill Lynch, said he expected the Nikkei average to fall further on Friday.
"GDP (gross domestic product) figures tomorrow could be very bad and very disappointing," Mohr said.
The Economic Planning Agency (EPA) will announce Japan's GDP for the January-to-March period Friday.
Hong Kong stocks slid to a lower close on Thursday as the weak yen continued to haunt the market, but bargain hunters helped repair some of the damage, brokers said.
The Hang Seng Index fell 93.30 points, or 1.17 percent, to end at 7,886.07, its lowest close since February 1995. The blue chip index earlier hit a low of 7,673.25.
Brokers said the market may have bottomed out but the yen would largely dictate short-term direction.
"We have seen some bargain hunters, which is good news because the order flow has been very one-sided recently," said Tom Leventhorpe, director of sales and trading at Indosuez W.I. Carr. "On a chart basis we closed above 7,800, which is a very important level of support."
Singapore shares bounced back on Thursday after plunging in morning trading on regional currency concerns and Wall Street's weaker close, dealers said.
Although they said that fears of a Japanese recession had bound the market to a narrow range, key players went looking for underpriced bargains late in the session.
"The STI index breached 1,050 briefly earlier but quickly rebounded. The selling or redemption is very limited so far," said a dealer.
After hitting a low of 1,048.52, the Straits Times Industrials Index (STII) closed up 19.02 points, 1.78 percent, at 1,086.83.
The Australian share market dipped 1.3 percent on Thursday as declines on Wall Street and in Asia piled on top of concerns that the embattled local currency would lead to higher interest rates.
The All Ordinaries index closed 34.2 points down at 2,558.7 after a somewhat firmer dollar pulled it off a low of 2,543.5. Turnover was a high A$1.12 billion (US$656 million).
"You don't know which way the dollar is going to turn, or which way Asia and America is going to turn. There are just so many outside influences at the moment that control our market," dealer Peter Struk of Reynolds & Co. said.
He added that individual share movements reflected portfolio reshuffling ahead of the financial year-end this month rather than fundamental factors.
The Australian dollar, however, did improve to 1.7033 against the US dollar, helping stocks off their lows.
U.S. stocks posted losses across the board Thursday as a soaring dollar renewed concern about the health of corporate America amid a string of profit warnings.
    The U.S. dollar surged  anew against the Japanese yen at midday Thursday,  hitting a session high of 143.55 yen as Treasury Secretary Robert Rubin said the answer to the yen's  weakness lies with the state of Japan's economy.    Rubin's statement, seen as ruling out the possibility  of concerted foreign exchange intervention to support  the yen, sent the Japanese currency tumbling, traders  said.
The Dow Jones industrial average suffered its second-largest point drop of the year, losing 159.93 points, nearly 1.8 percent, to 8,811.77.  The sell-off spread throughout the broader market. The technology-weighted Nasdaq Composite lost 23.50, or 1.3 percent, to 1,749.75 and the S&P 500 index fell 17.70, or 1.6 percent, to 1,094.58.
Activity was brisk on the New York Stock Exchange with 609.7 million shares changing hands. Declining issues swamped advancers, 2,280 to 769.  The losses came despite record low long-term interest rates. Investors flocked into the bond market as a "safe haven" investment, especially given the dollar's strength.  The benchmark 30-year Treasury bond ended up 21/32 of a point in price pushing the yield -- which moves in the opposite direction -- down to 5.65 percent, a record low.  The dollar rallied in New York trading after U.S. Treasury Secretary Robert Rubin said a concerted intervention would represent only a "temporary" fix for Asian currencies such as the yen. In late New York trading, the dollar was at 143.94 yen and 1.8086 Deutsche marks.  Equity traders, meanwhile, not only had to contend with the effects on the stronger dollar but also the non-stop release of profit warnings from corporate America.
    International financier George Soros said Thursday the world economy is on the brink of a slowdown as the crisis intensifies in Asia.  "You have the potential of a breakdown of the entire system if you have a slowdown of economic activity in the center even as inflationary pressures mount," Soros told a Stockholm International Peace Research Institute (SIPRI) conference. "We're on the edge of it, yes."  Soros, asked if his companies had taken up new positions in Asia, told the conference: "Yes, I should hope so."  He said Japan's situation is worrying for the world economy and shows there is more yet to come.  "Already Japan is suffering from conditions reminiscent of the 1930s . . . and, after all, Japan is the second-largest economy of the world, so we are not yet out of the woods," Soros said.  Asked if the G7 should step in to support the declining yen, Soros said, "I think everybody agrees that further decline in the yen would be detrimental for the world economy, but the question is whether you can actually stop the decline by intervention alone.

Friday June 12.
    Sliding Pacific Rim stocks stopped short on Friday to close flat to slightly higher as bargain hunting overcame gloom inspired by the yen's ongoing decline.  In Tokyo, the 225-stock Nikkei average closed Friday's session up 8.29 points or 0.06 percent at 15,022.33.  The index briefly slipped as low as 14,784.52, breaking the 15,000 barrier for the first time since January 14.
Turnover on the first section of the Tokyo Stock Exchange (TSE) swelled to 817 million shares from 418 million shares on Thursday, due to trade related to the settlement for Nikkei 225 June futures and options.
"The market is facing a very tough situation," said Hiroyuki Nakai, general manager, investment research department, Nikko Securities Investment Trust and Management Co. "The yen will slide further, and so will stocks."
The Japanese currency hit a near eight-year low of 144.75 to the dollar in Tokyo on Friday morning after U.S. Treasury Secretary Robert Rubin made comments which were interpreted to mean there will be no imminent joint intervention.
"If the dollar heads higher to 150 yen, that will very likely spark a tumble both in yen bonds and stocks, which makes us very pessimistic over the future of the market," said Noriyuki Fujiwara, a global equity strategist at Credit Suisse Investment Trust Management Co. Ltd.
Behind the continuing slide in the yen was growing concern over Japan's weak economic fundamentals, brokers said.
"If the Nikkei average cannot stop falling at the 14,700-14,900 level, it will test 14,000," Nikko's Nakai said.
Hong Kong stocks finished slightly firmer on Friday as short-covering emerged to push up prices after the market dropped three days in a row, brokers said.
The Hang Seng Index closed up 29.37 points, or 0.37 percent, at 7,915.44 after shrugging off 145-point early losses.
"Selling pressure sank and there was some short-covering on index futures, which fueled buying on blue chip stocks," said Ricky Tam, senior research analyst at Delta Asia Securities.
Brokers said trading was choppy ahead of the weekend, while the weak Japanese yen remained a concern.
"Even though the market does offer value, it is a question of when you believe that value starts to be realized," said Robert Sassoon, head of research at SG Securities.
"As long as people are concerned about the yen and its impact on other currencies in the region, and as long as interest rates remain high and have an impact on property demand, we are not going to have a sustained rally in the Hong Kong market," he said.
The weak yen put heavy downward pressure on other Asian currencies and the Hong Kong dollar, Tam said. Hong Kong dollar closed at HK$7.7492/02 to the U.S. dollar after hitting a low of HK$7.7499 in afternoon.
Singapore shares recovered from recent weakness on Friday, but the rebound was limited by macro-economic concerns -- including Wall Street's plunge on Thursday and Japan's woes -- that kept sentiment depressed.
The Straits Times Industrials Index ended up 4.66 points, or 0.43 percent, at 1,091.49.
However, traders were not heartened by the higher close.
"The whole market is weak. Except for the STI index, all the other indices are down. The STI is not reflective of the market," said one dealer. "Regional and global factors are governing the general market direction. These don't look good at the moment. We are telling our clients to be cautious."
    The big banks rode to the rescue of the Australian share market on Friday, lifting it to a firmer finish as investors went looking for yields and value.  The benchmark All Ordinaries index struggled 13.0 points or about 0.5 percent higher to 2,571.7 in a remarkable comeback from a slump inspired by a barrage of bad news from offshore.
"It's been a very difficult market today, although when it gets oversold it does bounce very quickly," said Reynolds and Co. dealer Grant Williams of the day's surprising finish.
The banks -- the benchmark index's largest component with a 22.5 percent weighting -- led the charge back into the black as investors eyed attractive dividend yields.
    Fears of the softening yen and its spreading impact on regional financial markets set off a selling spree among South Korean investors on Friday, which saw the market touch an 11-year low.  The Seoul Composite index closed down 26.61 points, 8.1 percent, to end at 302.09. The index has lost 20 percent of its market capitalization during 1998.  "The yen's weakness renewed investors' worries about possible depreciation of the Chinese yuan," said broker Cha Hee-gun at SK Securities. "In that case, the whole of Asia will be swirled in another financial crisis."
The yen recovered minimally by late afternoon in Tokyo on Friday after hitting 144.75 to the dollar, its lowest level since August 1990. Nerves over the falling yen and its impact on regional economies cast gloom on Asian stock markets.
"As the yen dropped below 144 to the dollar, overall Asian markets tumbled," said Kang Hun-koo, head of sales and equity sales at ING Barings.
Brokers said the yen's weakness would undercut Korea's value-added export items and the yuan's decline would hurt Korea's overseas shipments of light industrial goods.
The won was barely changed, falling back to 1,397 to the dollar from 1,391 on Thursday as traders feared that Japanese imports from Korea would slow.
"Our future now relies heavily on exports. Sluggish exports will deal a crucial blow to the Korean economy," said broker Cha Hee-gun of SK Securities in Seoul.
A Japanese recession would smack demand there for Korean goods, and probably force Korean imports of raw materials down even further.

Monday June 15.
 Stock prices throughout the Pacific Rim extended recent plunges on Monday as the yen fell lower and a barrage of gloomy data eroded confidence in the future of Asian economies, traders said.
Tokyo's benchmark Nikkei-225 average fell 197.16 points, or 1.31 percent, to 14,825.17, the first time it had closed below 15,000 since January 13, while the yen hovered at 145.55 after having hit 146.50 during the day.
Trading was lackluster, with 312 million shares changing hands on the first section of the Tokyo Stock Exchange. Losers beat gainers 679 to 430, with 177 issues unchanged.
Any hopes that corporate Japan would see brighter days in the near future faded Friday when the government announced that gross domestic product contracted for a second consecutive period in the January-March quarter, the standard definition of a recession.
"We're getting hit by the very sharp reduction in the economic pie we saw last week," said an analyst at a foreign research house. "Even the classic export stocks, which should be supported by the weak yen, are falling."
The falling yen, some worry, will bring exporters under further pressure if it forces other Asian countries to devalue their currencies in a bid to remain competitive with Japan, the region's economic dynamo.
"It's become broader than just Japan," said a broker at an international securities house. "Now it's about Asia."
Few think the market will stage a strong rebound in the near term, even though many believe Japan's cash-rich pension funds will look to buy shares on dips.
"We're on a real knife edge here," said a dealer at a European securities house. "With sentiment so low, bad news is no longer news."
     Hong Kong stocks dived to a sharply lower close on Monday as buyers took flight, brokers said.
The Hang Seng Index slumped 452.94 points, or 5.72 percent, to close at 7,462.50 after hitting a low of 7,438.72.
"No one is going to stick their neck out right now," said David Williamson, director at Indosuez W. I. Carr. "My feeling is that we have discounted a lot of the bad news but international investors are continuing to run away from the Hong Kong market because they fear the peg is going to go."
The market was dragged lower by the weaker yen and expectations a shortage of the Hong Kong dollar among banks, dealers said.
Brokers said concern about the strength of the Chinese yuan, or renminbi, continued to haunt the market.
"We are of the view that the renminbi will not be devalued and the peg will also remain intact and therefore we are seeing some very good value in the market," said Robert Sassoon, head of research at SG Securities.
Caution also prevailed ahead of local unemployment figures which were expected to add to the general gloom.
Hong Kong's unemployment rate rose to its highest level since 1983, with provisional data released after the market close showing the jobless rate at 4.2 percent in March-May, up from 3.9 percent in February-April.
Turnover ended at HK$6.24 billion against Friday's HK$5.99 billion.
The territory's chief administrator, Tung Chee-hwa, said on Monday the territory's economic problems were likely to remain for some time.
"Many quarters of difficulty lie ahead," he said.
Singapore shares ended sharply lower on Monday, led by a rout in banking stocks.
Selling by fund managers led to fresh year lows in the overseas shares of three of Singapore's Big Four banks, with shares of both United Overseas Bank and Overseas Union Bank plunging 10 percent to end at new year lows of Singapore $5.05 and S$3.56 respectively.
The SES finance index also touched a new year low of 291.07 before ending at 292.42, down 12.53 points or 4.1 percent.
Selling in other blue chips helped pull the benchmark Straits Times Industrials (STI) index down 3.54 percent or 38.65 points to 1,052.84.
Total market volume was a moderate 140 million units with 338 losers beating 35 gainers.
Elsewhere in Southeast Asia, Malaysian stocks were also sharply lower on the region's bad news, falling 20.13 points, 4.26 percent, to 452.24.

Tuesday June 16.
    Continued weakness in the yen kept Pacific Rim markets under selling pressure on Tuesday as stocks ended whipsaw trading sessions in disarray but generally lower, having received scant support from Wall Street overnight.
The yen surged more than four yen at one point, reaching a high of 142.35. However, it later slipped back to 145.80.
The Nikkei average closed down 104.79 points, or 0.71 percent, to 14,720.38. September futures fell 70 to 14,660.
Trading was relatively active with 425 million shares changing hands on the Tokyo Stock Exchange's first section.
"We've been all over the shop," said a dealer at a European securities house. "It's been very messy."
The Nikkei traded in a broad range, during the day reaching a high of 14,917.58 and a low of 14,614.74 -- its lowest level in the financial year that began on April 1.
Analysts said the market was searching for a bottom that could bring it below 14,309.41 -- the lowest close since Japan's bubble economy burst, hit on August 18, 1992.
"There is no question the market is worried," said Tetsuya Ishijima, strategist at Okasan Securities. "The market is searching for a bottom."
Hong Kong stocks ended higher on Tuesday after a volatile session which saw share prices track a rollercoaster ride by the Japanese yen.
The Hang Seng Index gained 63.95 points, or 0.86 percent, to close at 7,526.45, after jumping to a high of 7,642.66 points in early trade as the U.S. dollar slipped against the yen.
"The rebound in the yen was not convincing," said Alex Tang, head of research at Core Pacific-Yamaichi International. "Sentiment is still weak and there is no upward momentum to sustain this rebound."
Singapore shares flattened their descent on Tuesday following the tumble on Wall Street stocks overnight and continued weakness of regional currencies, dealers said.
"All the blue chips continued to fall. Sentiment is just being driven by weak currencies and the fall on Wall Street," a dealer with a Singapore brokerage said.
The benchmark Straits Times Industrials index brushed with the January low of 1,031 before inching up to 1,048.96 by the close, down 3.88 points or 0.37 percent.

Wednesday June 17.
    Asian stocks staged strong rallies on Wednesday as the yen strengthened to 142.3 to the dollar, helping markets claw back ground lost in hefty falls the previous day.
However, Tokyo stocks closed flat after a sharp sell-off of shares in the Long-Term Credit Bank of Japan (LTCB) dragged down the benchmark index, traders said.
LTCB was bashed by wave after wave of selling by both domestic and foreign institutions amid rumors the bank had been mentioned in a morning conference call between analysts of Moody's Investor's Service and Asia-based investors. Moody's declined to comment on the contents of the call.
The Nikkei 225 ended off 5.00 points, or 0.03 percent, at 14,715.38. September Nikkei futures rose 140 to 14,800.
A total of 404 million shares changed hands on the first section of the Tokyo Stock Exchange.
Rumors sweeping through the market that LTCB was in financial difficulties were denied by the bank as "groundless."
"Somebody wants this (stock) lower and in a hurry," said a salesman at a European securities house. "Whether it's true or not, who knows?"
LTCB ended trading down 30 at 123. Other banking issues were mixed as a firmer yen alleviated concerns that their huge dollar-denominated loan portfolios to Southeast Asia were on the brink of going bad.
The mass-circulation Yomiuri Shimbun reported in its morning edition that the ruling Liberal Democratic Party had called on banks to adopt a system that would force institutions to liquidate non-performing loans.
While such a practice would help restore confidence in the financial system, some market participants were concerned it could prompt bankruptcies, dragging the Nikkei lower.
Analysts said the dollar/yen rate, which clung stubbornly to the mid-143 yen level in afternoon trading, would remain the catalyst for the market in the near term, with many worried the yen's recent relative strength will prove fleeting.
"Everybody's watching forex," said an analyst at an international research house. "People are saying for the first time they don't know where the bottom is for the yen."
Hong Kong stocks rallied to a sharply higher close on Wednesday with market bulls spurred by the rebounding yen, brokers said.
The Hang Seng Index jumped 477.90 points, or 6.35 percent, to end at 8,004.35 after hitting a high of 8,005.76.
Turnover slipped to HK$6.14 billion against Tuesday's HK$7.57 billion.
But caution remained the watchword after recent volatility and brokers said it was too early to determine whether Wednesday's rally was an aberration.
"The Hong Kong market at the moment is almost a warrant on the yen movements," said Miles Remington, sales trader at SG Securities. "Certainly, the underlying factors have not gone away."
Singapore shares ended sharply higher on Wednesday led by a rebound in banking and property stocks.
Dealers said sentiment was lifted by the stronger Singapore dollar, itself a result of the yen rally. A small gain on Wall Street overnight also underpinned the market.
"It is mainly a technical bounce as the market has been very oversold. Property and banks, which have been the worst hit, are up again," a broker at a Singapore firm said.
After a slow start, the Straits Times Industrials index closed up 58.74 points or 5.60 percent at 1,107.70.

Thursday June 18.
    The United States rode to the rescue of the battered Japanese yen Wednesday in a dramatic shift from its recent hands-off approach. Joining forces with Japan's central bank, the Treasury Department instructed the New York Federal Reserve to spend an estimated $2 billion to boost the value of the yen against the dollar -- the first U.S. intervention on behalf of the yen in more than six years.  Intervention is when central banks buy or sell a currency on the open market to affect its value.  News of the intervention sent the value of the yen soaring to 137 yen to the dollar from 142 late Tuesday. It also fueled a strong rally on Wall Street as equity investors, who had feared the Asian economic crisis would worsen and the weak yen would eat into the bottom lines of large multinational corporations, breathed a sigh of relief.  By late afternoon, the Dow Jones industrial average surged 163 points to 8,828.
The dollar's skid quickly stung the bond market, pushing the yield on the benchmark 30-year bond up to 5.74 percent as its price slid 1-13/32 of a point. Many investors feared that Japan might sell U.S. bonds to replenish its dollar reserves after Wednesday's intervention.
The Japanese currency had fallen to its lowest level in eight years recently on fears that the ailing Japanese economy would spark another round of Asian financial shocks.
Treasury Secretary Robert Rubin said Washington stood ready to continue supporting the yen if needed. However, he said Wednesday's action did not mark a change in U.S. dollar policy.
"The answer to that is no," Rubin said in response to a question at a White House briefing. "I think the strong dollar policy has served us exceedingly well over the past several years and still does."
"The actions that were taken and announced both in Japan and the United States today were very much animated by concern for Asia, the other parts of Asia, but has nothing to do with our more general policy with respect to the dollar," he said.
Traders said the intervention appeared limited to U.S. and Japanese authorities, without a hand from other big industrialized countries. Britain said the action was a U.S.-Japanese initiative and wished it every success.
"This is a clear shift in U.S. policy and it probably indicates that the U.S. has received some concessions from Japan," said Henry Willmore, senior economist at Barclays Capital in New York.
President Bill Clinton said the action was taken to show Washington supported Japan as it takes steps to revive its economy. Clinton said he had spoken with Japanese Prime Minister Ryutaro Hashimoto shortly before midnight Tuesday to express U.S. support for Tokyo.
"I was very encouraged by the Prime Minister's statement that he intends to pursue aggressive reform of their banking institutions and intends to do the things that were necessary to get the economy going again," Clinton said at the White House.
Japan's economy, the second largest in the world, has tumbled into recession this year, shrinking at an annual rate of 5.3 percent in the first quarter of 1998.
Worried that the Japanese crisis could spread elsewhere in Asia and ultimately affect the U.S. economy, Washington has repeatedly called on Tokyo to do more to revive its economy.
But it has been frustrated with Japan's reluctance to commit to specific plans. An additional factor in the U.S. decision to go to Japan's rescue was fear that the Japanese currency slide would force its huge neighbor China to devalue its currency. China had warned that it could not withstand the economic pressure from the Japanese situation much longer.
"There's one other reason we're doing this -- a very important reason -- and that's the Chinese," said a U.S. administration official, who asked not to be identified.
The official said Washington wanted to avoid at all costs a devaluation of the Chinese currency, the yuan, because that could have set off a chain reaction throughout Asia.
    The sagging yen and the decline of Japan's economy have put additional economic pressure on already struggling nations across the Asian continent.
Exporters in countries such as South Korea, Indonesia or Thailand -- at the receiving end of multibillion dollar bailout deals -- need the Japanese market to sell their products, but are unable to do so since the weak yen makes their products more expensive for the Japanese to buy.
In a joint statement, Clinton and Hashimoto said the two economic superpowers had to act together to end a nosedive in the yen.
"The president and I are delighted to see that the United States and Japan have cooperated in the exchange markets to support a strong, stable yen," Hashimoto said.
The U.S. Treasury confirmed initial intervention at 142 yen. The Fed also reportedly made purchases at 141 yen, 140 yen and 138.50 yen.
The statement by Clinton and Hashimoto came a few hours after Japan's parliament passed a special 4.65 trillion yen ($32.7 billion) supplementary budget that is part of a record 16.65 trillion yen economic stimulus package announced in April.
The statement also came a day ahead of a hastily arranged visit to Japan by U.S. Deputy Treasury Secretary Lawrence Summers that will include a meeting of finance officials from the Group of Seven industrialized nations.
Economists' reactions were mixed, with many stressing Japan still needs to get its house in order.
"I think the Japanese are in a very tough dilemma," said Clyde Prestowitz, president of the Economic Strategy Institute.
"They don't seem to be able politically to take the steps that are necessary to get their economy stabilized. In fact, it's not even clear that they entirely recognize the danger that the falling yen poses to the rest of Asia and in fact the rest of the world economy."
Alison Montgomery, a currency economist with I.D.E.A., said it is unclear whether the Treasury's move is a sign the yen has peaked or amounts to little more than a "smoothing operation" by the government.
"At this point, we don't think the U.S. will abandon the strong dollar policy; it is just to add stability " she said. "But the fundamentals in Japan haven't changed, we still need to see significant action from the Japanese authorities."
A Treasury official said the department last intervened in the currency markets to prop up the dollar against the yen in August 1995. The last time the United States stepped into to buy yen was in February 1992.
A falling yen lowers the price of goods from Japan and thus helps keep a cap on U.S. inflation.
    Asian markets soared Thursday, closing in high spirits after regionwide fears of currency collapse were assuaged when the United States finally stepped in to help Japan rescue its rapidly sliding yen.
Tokyo's key Nikkei average ended more than 4 percent higher on Thursday, as joint currency intervention by Japan and the United States to support the yen spurred hopes that external pressure will force Japan to carry out new reform steps, brokers said.
The Nikkei average of the leading 225 shares rose 4.39 percent, or 646.16 points, to 15,361.54. Nikkei 225 futures closed 650 points higher at 15,450.
On the first section of the Tokyo Stock Exchange (TSE), turnover swelled to 701 million shares from 404 million shares traded Wednesday.
On Wednesday, the United States and Japan moved to halt a nosedive in the battered Japanese currency which had threatened to push Asia into a fresh round of crisis.
The dollar, which rose to an eight-year high of above 146 yen earlier in the week, plunged to 136 yen in New York on the intervention and was trading at around 137.00 yen in late Tokyo on Thursday.
Banks spiked up after their recent sell-off amid worries over Asia's economic turmoil, with Bank of Tokyo-Mitsubishi Ltd. up by its daily limit of 200 at 1,430 and Fuji Bank Ltd. also up by its daily limit of 100 at 636.
Better sentiment helped the Long-Term Credit Bank of Japan Ltd. (LTCB), which was battered on Wednesday due to market rumors about its financial health that were denied by the bank. LTCB shares ended three yen higher at 126.
Hong Kong stocks leapt to a markedly higher close on Thursday as investors breathed a sigh of relief after the intervention rescued the yen, brokers said.
The Hang Seng Index rose 511.62 points, or 6.39 percent, to end at 8,515.97 after hitting a high of 8,644.14.
"In the last week or so the market has been oversold and I still believe there is upside," said David Williamson, director at Indosuez W.I. Carr. "It is not just a Hong Kong story today, it is a whole regional story."
The move also set most other Asian markets alight.
Seoul stocks soared over 7 percent while the Philippine market was up more than 6 percent. Key indices in Thailand and Malaysia added more than 5 percent.
Most brokers believed Hong Kong's blue chip index had further upside but said it was too early to determine whether the yen would hold on to its renewed strength.
Singapore shares ended sharply higher on Thursday with the benchmark Straits Times Industrials index closing at 1,133.41, up 25.71 points or 2.32 percent.
However some dealers say the rebound was far too fast and sharp.
"Prices just gapped up from the open in the morning. Looking at the volume, there are a lot of traders out there, a lot of proprietary traders who are long in the market. I think many of them may not hold the positions for long," a dealer with a Singapore brokerage said.
Dealers said buying was across the board and blue chips led as they were the most battered since the start of the week.
"But I won't be buying at these prices. A lot of things have not really changed except for the currencies and it is a big question whether that can be sustained," another dealer said.
  Australian shares vaulted higher on Thursday, propelled by a resurgent Australian dollar and overall improved regional sentiment.
The All Ordinaries index jumped 58.9 points or 2.3 percent to 2,608.2. The rise was the biggest jump since the benchmark's record points gain of 143.8 points on October 29, 1997.
"What a surprise it was," said Austock Brokers director David Perry of the day's strength. "The Australian dollar was the key factor, as was the positive sentiment out of the United States."

Friday June 19.
    Stocks lost ground across Asia on Friday after rebounding sharply the previous day as investors locked in gains but otherwise chose to watch and see what official aid Japan would offer the struggling yen.
The Tokyo stock market's key index closed slightly lower, rattled by speculation that Long-Term Credit Bank of Japan Ltd. (LTCB) might merge or was facing difficulties in restructuring on its own.
Investors and traders were nervous of possible restructuring moves in the financial industry. Many were taking a wait-and-see stance ahead of meetings of Group of Seven (G7) deputy finance ministers over the weekend, brokers said.
The Nikkei 225-share average was down 93.56 points, or 0.61 percent, at 15,267.98. Nikkei September futures finished 170 points lower at 15,280.
On the TSE's first section, turnover was 482 million shares. Losing issues beat gainers 679 to 419.
The yen slipped back against the dollar to 137.83 from 136.40 on Thursday.
"Almost consensus, people are expecting (the yen) to creep back up to 140," said one broker.
The Nikkei average was dragged down by the woes of LTCB, which saw its shares briefly plunge below the psychologically important 100-yen level for the first time since its listing.
LTCB, recently been hit hard by public speculation about its financial health, was pounded in the wake of an announcement on Thursday by Moody's Investors Service that it had lowered the subordinated debt rating of LTCB to B1 from Ba1.
On Friday, LTCB recouped most of its earlier losses and reached 112 yen, down 14 yen from Thursday's close, when the Tokyo Stock Exchange (TSE) temporarily suspended trading in the company.
Kyodo news agency quoted unidentified sources as saying the Japanese government was mulling steps to help reconstruct LTCB, including a possible merger with Nippon Credit Bank, and that LTCB was unable to reconstruct its business on its own.
Hong Kong stocks wiped out earlier losses in a late comeback to close Friday higher on the yen's newfound staying power, brokers said.
The Hang Seng Index added 75.94 points, or 0.89 percent, to end at 8,591.91 after hitting a low of 8,350.45.
"People are getting a little bit more confident that the worst of the yen may be behind," said Kent Rossiter, institutional sales manager at Nikko Securities.
"The rush to either buy stocks or cover positions was largely done yesterday," he added. "Now people are taking a wait-and-see on what measures the Japanese government comes up with."
Turnover dropped to HK$6.44 billion from Thursday's hefty HK$10.35 billion as investors stepped to the sidelines to wait for news of Japan's plans to revive its economy.
Singapore shares closed down but off their lows on Friday following some firming in regional currencies in the late afternoon.
But trading was relatively quiet with most investors taking a cautious wait-and-see stance ahead of the upcoming G7 meeting in Japan.
"It has been relatively quiet. There is a bit of arbitrage activity going on in the foreign and local tranches of banks," a broker with a Singapore firm said.
The SES finance index ended little changed at 309.06, down 0.40 points.
The benchmark Straits Times Industrials index bounced off its intraday low of 1,100.48 to close at 1,122.93, down 10.48 points or almost 1 percent.
Total market volume was 164.7 million shares with 226 losers beating 91 gainers.
Australian shares locked in a lower close on Friday as traders consolidated Thursday's big gains and awaited the outcome of the G7 meeting in Japan.
The benchmark All Ordinaries index shed 19.4 points or about 0.7 percent to 2,588.8, having spent most of the day range trading in a 7-point band.
"Everyone is just waiting for the big meetings in Japan," said a Sydney-based dealer. "In the meantime they are taking profits from yesterday and in the current climate they are taking smaller profits than they have in the past."

Monday June 22.
    All eyes in the Pacific Rim were on Japan Monday as markets grew anxious over the recession-struck nation's power to restore stability to its economy and the embattled yen.
Tokyo stocks rose as a senior member of the ruling Liberal Democratic Party (LDP) pledged to complete details of a widely discussed "bridge bank" to help Japan resolve its banks' problem loans, traders said.
Koichi Kato, secretary-general of the LDP, said he was committed to the proposed bank, which would extend loans to healthy borrowers of failed financial institutions before July 12 Upper House elections.
The Nikkei average was up 41.11 points, or 0.27 percent, at 15,309.09. Volume on the first section was a slim 370 million, down from 482 million on Friday.
"You want evidence investors aren't in the market? Just look at the volume," said a fund manager at an investment advisory firm affiliated with a currency bank.
A communique issued after an emergency meeting of Group of Seven and Asian nations in Tokyo on Saturday said restoration of Japan's banks was of "vital importance" to the region, but left the yen floundering against the U.S. dollar.  The dollar gained ground against the Japanese yen on Monday, trading at 138.54/59 yen following this weekend's meeting of G7 officials.
"I expect the yen to go back to 140," said Ricky Tam, senior research manager at Delta Asia Securities.
Traders said Kato's timetable added credibility to government efforts to restore confidence in Japanese markets.
"They're seeking to create the impression that they're doing something and they're doing it quickly," said Michael Wilkins, a dealer at Credit Lyonnais.
Market participants were also focused on the Long-Term Credit Bank of Japan (LTCB), which closed limit-down amid media reports and subsequent denials that it would merge with Dai-Ichi Kangyo Bank (DKB) or Daiwa Bank.
"The market's putting the squeeze on those guys," said one dealer at an overseas securities house on the fall in the bank's shares. "It's going to be very messy from here."
LTCB has been the subject of persistent market speculation since last week, when rumors emerged that it would merge with fellow long-term lender Nippon Credit Bank (NCB).
LTCB closed down 50 yen at 62, while DKB slid 19 to 762 and Daiwa dropped 35 to 175. NCB fell 10 to 125.
Hong Kong stocks suffered a heavy setback on Monday, closing sharply lower after the G7 meeting failed to soothe concerns about Japan's ailing economy.
The Hang Seng Index tumbled 387.70 points, or 4.51 percent, to close at 8,204.21 points after sliding to a low of 8,180.04 during the session. Turnover was HK$5.65 billion compared with HK$6.44 billion last Friday.
"People are disappointed that nothing happened in Japan over the weekend," said Douglas Hansen-Luke, associate director at South China Securities.
Brokers said uncertainty remained about how Japan would boost its economy and sort out its banking problems, prompting some investors to take profits in the Hong Kong market after an 8.55 percent gain in the Hang Seng Index last week.
"The market gets very unrealistic on these things. They want things to change today," said Richard Verin, head of equities trading at Credit Suisse First Boston.
Singapore shares closed down more than two percent on Monday, depressed over Japan's economic recession, with blue chips suffering the heaviest losses.
The 30-share Straits Times Industrials Index closed down 2.18 percent, or 24.48 points, at 1,098.45, off its low of 1,083.83.
Dealers said the weakening yen dragged prices down further in the afternoon and expected the currency to stay weak unless Japan announces effective economic reforms.
"But I'm still skeptical Japan will come up with anything concrete," said Jeffrey Teo, institutional dealer at Santander Investment Securities.
    The dollar edged higher in Europe in early Monday trade, and traders expected it to continue gaining after a bland statement from a weekend meeting of Group of Seven (G7) officials failed to boost confidence in the yen.  The yen began its slide after the statement made no specific reference to the currency, saying only that it was vital for Japan, Asia and the world economy that Japan restore the health of its banking system, achieve domestic demand-led growth and open its markets.  "We're targeting 142 (yen to the dollar) at the end of this week, based on the lack of specific plans and timetables coming from the G7 meeting," said Jesper Dannesboe at ABN AMRO in London. "The market will be cautious to take the dollar too high too fast but the economic situation in Japan is likely to worsen before it gets better, so there is room for the yen to weaken," said Dannesboe. By mid-morning the dollar was near European session highs at 138.44/54 yen, just above overnight highs around 138.40 and up over three percent from 134.12/22 in late European trading on Friday. It was also firmer against the mark at 1.7987/92 from 1.7838/48.
G7 and Asian officials said on Saturday joint U.S. and Japanese currency intervention last week to boost the yen had created a "window of opportunity" for Japan to repair its economy but that the chance would not last forever.
The dollar was knocked off highs temporarily overnight after Japan's Vice Finance Minister for International Affairs Eisuke Sakakibara said Japan would intervene in the currency exchange market when appropriate. He said the G7 nations and other countries were in close contact on currency exchange cooperation.
"This is symptomatic of the fact that markets don't have very much confidence in themselves at the moment," said a senior equity trader. "People are genuinely concerned about the significant threat of a potential deflationary wave from Asia."  "The yen has slipped this morning, which shows there are people who feel that Japan may drag their feet or renege on their promises," he added.  Japan pledged at the G7 meeting to solve its bad loans problems.
Worries about Japan's financial system and its beleaguered economy had sent the yen to eight-year lows of below 146 against the dollar before a surprise joint rescue by Washington and Tokyo last week bolstered the Japanese currency by some 10 yen.

Tuesday June 23.
Under intense pressure to solve its bad loan banking mess, Japan said on Monday that it launched a new watchdog group to supervise its financial sector and has has come up with a timetable for getting started on its banking clean-up scheme.
But doubts still circulated over what form the scheme would take and whether it would be bold enough and timely enough to persuade skeptics that Japan means what it says this time.
Ruling Liberal Democratic Party (LDP) Secretary-General Koichi Kato said the party planned to decide key details of a blueprint to solve banking woes that have dragged down the world's second-largest economy and risk taking the world along with it.
The main component would be a so-called "bridge bank," which would provide loans to sound borrowers if their banks fail.
Worries had surfaced that policy-makers would not make tough decisions on the issue ahead of the July 12 parliamentary Upper House election, but Saturday's meeting of Group of Seven and Asian nations in Tokyo turned up the heat on Japan to act quickly.
Kato, who held crisis talks with Prime Minister Ryutaro Hashimoto on Monday morning, said the party would provide details of the bank -- which could resemble one the United States set up in the 1980s to clean up its bad loan crisis - by July 8.
Whether Japan can really come up with a blueprint to sort out the bad loan problems at its banks and consolidate its financial system is likely to determine not only the fate of the weak yen and Tokyo stock prices, but will also affect whether the rest of Asia slips back into crisis mode.
A government advisory panel headed by Toyota Motor Corp. chairman Shoichiro Toyoda handed Hashimoto a report on Monday saying that in order to get the economy back on the road to recovery, complete disposal of bad loans was necessary.
"We must completely get rid of 'negative assets' such as the bad loans and the resulting worries over the financial system," the panel said in its report.
It added if such steps were taken along with structural reform, the economy was likely to record an annual growth of 2.5 percent on average between fiscal years 1998 and 2003.
  Highlighting the need for Japan to fix its banking woes, sources at the Long-Term Credit Bank of Japan Ltd. (LTCB) said on Saturday that the bank was considering a merger or restructuring -- both requiring some form of public funds.
On Monday, after LTCB's share price plunged nearly 45 percent, Hashimoto said the government and ruling party would look for ways to restore market confidence in the bank.
In February, Japan enacted a 30 trillion yen ($217 billion) financial stabilization package including 17 trillion yen to protect depositors and 13 trillion to recapitalize banks.
But it still has a lengthy list of issues to tackle, including getting banks to disclose the true extent of their problem assets and to speed up write-offs of bad loans.
Authorities must also clarify a currently-vague framework for using public funds to handle failed institutions and to facilitate the merger of those too weak to survive but too important to go out of business altogether.
  A key part of that framework would be the creation of the bridge bank to provide funds, possibly from public coffers, to firms left in the lurch when financial institutions fail.
LDP policy chief Taku Yamasaki has said the bridge bank should be allowed to use public money, but the head of a new financial watchdog launched on Monday told his first news conference that it was too early to say if such an institution was needed or what form it might take.
The new Financial Supervisory Agency (FSA) will play a critical role in any banking clean-up, but hard details on how it is to function have been in short supply and experts worry the agency has too few of the expert staff needed to carry out its job.
FSA chief Masaharu Hino said he would undertake "tough and transparent" supervision of the nation's troubled financial sector, based on clear and fair rules.
However, despite Japanese newspaper reports, he said he had not yet decided whether to launch simultaneous inspections of the nation's top 19 banks.
Assessing the scope of the bad loan problem -- in particular the amount of loans not yet classified as "bad" but which might turn sour -- is vital to creating a scheme to solve it.
    Asian stocks ended mixed on Tuesday amid skepticism over Japan's will to fix its economy and trader anticipation of a barrage of troubling economic news out of Hong Kong.
Tokyo's benchmark Nikkei 225 average fell 254.49 points, or 1.66 percent, to 15,054.60. September futures fell 220 to 15,050. A modest 410 million shares changed hands in broadly negative trading.
While the ruling Liberal Democratic Party (LDP) has discussed the establishment of a "bridge bank," which is expected to extend credit to sound borrowers in the event their bank fail, no concrete details have been divulged.
Talk of the bridge bank briefly buoyed shares on Monday. But while party leaders confirmed they were studying three main proposals for the new institution, market participants concentrated on the speed with which progress would be made.
"It's going to be too little, too late," said one dealer at an overseas house. "The market will be disappointed."
In currencies, the yen made an unconvincing rebound to 137.72 against the dollar from 137.88 the day before.
  Hong Kong stocks ended modestly higher on Tuesday but well off the day's highs as government measures to boost the economy failed to change investors' gloomy view of the territory's outlook.
The Hang Seng Index closed 15.46 points, or 0.19 percent, higher at 8,219.67 points after a knee-jerk reaction to an economic stimulus package pushed the blue chip index to a high of 8,341.44 earlier. Volume was HK$6.41 billion compared with HK$5.65 billion on Monday.
"It is probably more cosmetic than anything else so from that point of view it is not going to relieve totally the pressures that are on the economy," Robert Sassoon, head of research at SG Securities, said of the government action, which focused mainly on a suspension of land sales to support real estate prices.
Hong Kong leader Tung Chee-hwa said on Monday the economy was likely to contract in the second quarter of this year after shrinking 2.0 percent in the first quarter and announced a series of moves to help boost the economy.
After the market closed on Tuesday, the government announced a 15 percent drop in the value of retail sales in April. This followed a 12 percent fall in March.
Reflecting the problems still plaguing Hong Kong, Standard & Poor's on Monday placed Hong Kong's long- and short-term overseas and local currency ratings on CreditWatch with negative implications.
S&P said the action reflected increasing financial sector strain and the growing likelihood of a protracted economic downturn that could challenge the ability of Hong Kong's government to maintain its prudent fiscal policies and traditional non-interventionist stance towards the economy.
"S&P was just another nail in the coffin," said Osborn, who expected the Hang Seng Index to test 7,300 to 7,400 soon.
  Singapore shares ended down on Tuesday as the market waited for Japan to take firm action to cure its economic ills.
The 30-share Straits Times Industrials Index closed down 16.20 points, 1.47 percent, at 1,082.25.
"The news and themes in recent weeks have been negative and that has set the trend for a negative tone and it will remain so until we get a significant piece of good news," said T.K. Yap, sales director at OCBC Securities.
He said in the absence of news, the market was just mirroring the state of regional currencies, which in turn took their lead from the yen.

Wednesday June 24.
 Movements in the yen joined with an overnight rally on Wall Street to wash Pacific Rim markets with some positive spillover Wednesday, with most Asian markets closing moderately higher.
The yen regained its balance to trade at 140.11 against the dollar after falling to about 140.90, its lowest level in a week.
Its renewed weakness tempted Tokyo funds to snap up high-tech exporters and other blue-chip stocks, dealers said.
The Nikkei 225 average ended up 68.58 points, or 0.46 percent, at 15,123.18. September futures were up 10 at 15,060.
Activity remained muted. A total of 373 million shares changed hands on the first section, down from Tuesday's 421 million.
Japan's high-tech sector also benefited from an overnight rally in New York that pushed tech shares -- as measured by the Nasdaq 100 index of technology issues -- to a record close.
"These stocks are going to have revisions up for the interim period and possibly even the year," said Celia Farnon, a manager at Nomura Securities.
Banking shares were among the most active, with continued confusion over the future of the Long-Term Credit Bank of Japan (LTCB) boosting action.
LTCB, which has denied widespread rumors it would be merged with another institution, fell one yen to 70 on a volume of 22.11 million shares. It was the most actively traded issue.
While uncertainty over plans to rid the banking sector of an estimated 77 trillion yen in problem loans still weighed on the stock market, some dealers said recent comments by leading politicians on the establishment of a "bridge bank" were encouraging.
  Hong Kong stocks closed firmer on Wednesday in light but choppy trade as investors covered their positions in late afternoon when the yen rebounded, brokers said.
The Hang Seng Index added 77.10 points, or 0.94 percent, to finish at 8,296.77.
"The market is actually directionless but people expected some good news from U.S. President Bill Clinton's China visit due to start later this week," Lai said.
Brokers said the government's stimulus package had failed to boost enthusiasm in the market and sentiment had been further dampened by rating agency Standard & Poor's decision on Monday to place the ratings of Hong Kong on CreditWatch.
"Two thirds of the stocks have not changed price," said Frederick Tsang, strategist at BNP-Prime Peregrine Securities.
  Singapore shares trudged further downhill on the yen's back on Wednesday.
Dealers said there was little activity as most investors stayed on the sidelines, watching the yen and waiting for Japan to come up with firm measures to tackle its economic problems.
"Everybody's closely watching it. The market is just drifting down. Japan is the overriding factor," said a dealer at a local brokerage.
The 30-share Straits Times Industrials Index (STII) closed down 7.40 points at 1,074.85, giving up early gains which took it to an intra-day high of 1,089.20.
Most sector indices finished flat to weaker after starting on a firm note.

Thursday June 25.
Hong Kong stocks shot up more than 4 percent on Thursday on good news from the property sector, but concerns about the weak yen generally kept a lid on Asian and Australian markets.
Tokyo stocks ended little changed on Thursday as market participants waited for more details as to how the government would help bail out the nation's troubled banking system.
The benchmark Nikkei-225 average rose 9.04 points, or 0.06 percent, to 15,132.22. September futures rose 30 to 15,090.
Turnover on the first section improved to 422 million shares from Wednesday's 373 million.
Progress on the establishment of a "bridge bank" to help sound borrowers of failed banks may come later on Thursday.
Japan's banks are seen at the center of the country's economic malaise, sitting on a mountain of problem loans valued at 77 trillion yen that has prompted them to rein in lending.
For a second day, Long-Term Credit Bank of Japan (LTCB) was the most actively traded issue. The bank, which has denied rumors it is in financial difficulty and will be merged, briefly fell to 50 yen - a record low -- before recovering to 58. LTCB was down 12 on volume of 27.35 million shares.
Meanwhile, the yen weakened to the 141 level, improving the yen value of repatriated profits.
"Japan's high-techs, which have consolidated recently, were helped a lot by the rally in New York," said Masatoshi Sato, manager at Kankaku Securities Co.
  Hong Kong stocks rallied to a sharply higher close on Thursday, fueled by futures-related buying as property and banking stocks appeared to have found a support after government measures were introduced to lift the economy.
The blue chip Hang Seng Index jumped 369.06 points, or 4.45 percent, to close at 8,665.83, off a high of 8,705.81.
Property prices seemed to have stabilized somewhat after Hong Kong Chief Executive Tung Chee-hwa announced on Monday the suspension of government land sales until March as part of a package to stimulate the economy, said Alex Wong, research manager at OSK Asia Securities.
Wong said there was speculation that U.S. President Bill Clinton would announce granting permanent Most Favored Nation trade status to China during his visit.
Index heavyweight HSBC Holdings surged HK$8.00 to HK$188.50 on derivatives-linked buying and boosted by hopes that more offshore deposits would flow back to Hong Kong.
Brokers said some blue-chip companies had indicated they would move their offshore deposits to Hong Kong after the government waived profit tax on corporate interest earned from Hong Kong deposits.
  Singapore shares ended weaker on Thursday as negative sentiment hung over the market.
"Sentiment is on the downside," an institutional dealer said. "It's something that's constantly nagging the market, telling people not to be too gung ho, whether in Singapore, Malaysia or elsewhere in the region."
By the close, the 30-stock Straits Times Industrials Index had fallen to 1,069.83, down 5.02 points or 0.47 percent. Total market volume was modest at 107.9 million shares.
"The market is following the yen and regional currencies. For the past year, the market has been tracking currencies very closely," another dealer said.

Friday June 26.
Pressure on Pacific Rim stocks eased somewhat on Friday as activity in the Japanese banking sector sparked a late afternoon rally in most major regional markets, although traders still cautiously scrutinized the health of the yen.
Tokyo shares erased losses to close higher on Friday after local media reported that troubled Long-Term Credit Bank of Japan (LTCB) would merge, helping remove at least one problem from Japan's rickety banking system.
Trading in both LTCB and Sumitomo Trust & Banking was suspended on the Tokyo Stock Exchange after it was reported the two banks would merge.
The benchmark Nikkei-225 average finished 77.82 points, or 0.51 percent higher, at 15,210.04. September futures wiped out a 160-point loss to finish up 140 at 15,230.
Volume was lackluster with 424 million shares changing hands.
Traders said the merger, if it comes to term, displayed a new resolve in the country's attempts to deal with its problems.
"This is an example of things to come," said a trader at an overseas brokerage. "Things are progressing and that is good news."
Even with the trading suspension, LTCB was the most active issue on the TSE for a third day, rising 15 yen to 73 on volume of 18.64 million shares. Sumitomo Trust fell 20 yen to 648 on volume of 1.59 million shares.
Earlier in the day, the Nikkei average fell below the psychologically significant 15,000-yen level as a weakening yen underscored Japan's economic malaise. The yen weakened to around 142.50 in Tokyo.
In general, banking shares continued to dominate trading as the market awaited details for a "bridge bank" that would extend credit to sound borrowers of failed banks.
  Hong Kong stocks recovered most of the morning's losses to close slightly lower on Friday, and brokers said next week's trend would again be dictated by factors affecting the Japanese yen.
The Hang Seng Index closed 57.97 points, or 0.67 percent, lower at 8,607.86, after tumbling more than 250 points in mid-morning to a low of 8,410.60.
"The market's trend really depends on the yen," Steve Cheng, associate director at Lippo Securities, said. "That's because the stability of the currencies of Hong Kong and China is linked to the yen."
Currency jitters also fueled trading activity in Hang Seng Index futures which exacerbated the market's choppy trend, brokers said.
Futures were being used not only as a hedge against equity portfolios but increasingly as a hedge against a depreciation in the Hong Kong and Chinese currencies, brokers said.
  Singapore stocks sprinted up in Friday afternoon trade as the dollar pared gains against the yen.
The 30-share Straits Times Industrials Index (STII) closed up 15.76 points, or 1.47 percent, at 1,085.59. Total market volume was fairly active at 163.7 million shares.
But dealers said they were not hopeful that gains would be sustained through next week.
"I don't think this is going to be lasting. Buying in blue chips is very light," a local brokerage dealer said.
"It takes a lot to get the market moving. It's painfully obvious the economy is going into a recession," said Jeffrey Teo, institutional dealer at Santander Investment Securities.
 

Monday June 29.
The widely watched "tankan" survey released by the Bank of Japan helped bolster stocks in Tokyo and neighboring Asia markets Monday, but futures concerns sent Hong Kong down.
The tankan survey showed that Japan's business confidence had not deteriorated as much as expected, brokers said.
The key Nikkei 225 average rose 155.69 points, or 1.02 percent, to end at 15,365.73.
"The index did not turn out to be extremely bad, and the stock market had mostly discounted negative figures," said Shinichi Ichikawa, strategist at Credit Lyonnais Securities.
"The market was paying closer attention to how banks' bad loan problems will be settled," he said.
The diffusion index for major manufacturers -- the most widely watched component of the Bank of Japan's tankan -- fell to minus 38 in June from minus 31 in the previous survey in March. But that was not as bad as the minus 42 average for June in a Reuters survey of economists' forecasts.
The "tankan" survey lifted the yen against the dollar, which also helped brighten sentiment in the stock market. The dollar briefly rallied to 143.40 yen on Monday, but it quickly eased to as low as 141.38 yen after the survey was released.
The yen has been on a declining trend again in recent sessions amid worries over Japan's flagging economy, and skepticism that the government will take swift action to solve the bad loan problems.
Share prices in many banks recovered on Monday after Friday's announcement by Long-Term Credit Bank of Japan and Sumitomo Trust & Banking that they were discussing a merger.
The news prompted some optimism that the merger would be a first step in fixing Japan's banking system, which is creaking under the weight of as much as 77 trillion yen in problem loans.
LTCB jumped 24 yen to end at 97 in the heaviest trading volume in the first section of the Tokyo Stock Exchange (TSE). Commerz Securities (Japan) senior manager Hitoshi Ichio said: "The rise in bank shares today was mostly attributed to buying backs, which will not continue for a long time."
  Hong Kong stocks gyrated from positive to negative throughout Monday trade to close sharply down on trade related to the expiration of June futures contracts.
Brokers said more weakness was likely on Tuesday.
The Hang Seng Index closed down 147.15 points, or 1.71 percent, at 8,460.71, after leaping ahead to 8,790.55 after the open, then sliding to a low of 8,444.25 just ahead of the close.
"Because of the rollover, there is a premium to the futures," Gary Wong, associate director at Vickers Ballas said. "But once June expires, the index will fall another couple hundred points."
The June Hang Seng Index futures contract, which expired at the close of trade on Monday, gained 66 points to end at 8,646, a large premium to the spot market.
Strong demand to buy back or close out the June contract pushed it well above the spot market close, brokers said.
But the July contract sank 220 points to close at 8,390 on heavy trade of 26,613 contracts.
"People are still very bearish on the market," Kathleen Emerson in institutional sales at ING Futures and Options said.
"What you are probably seeing is people liquidating their short positions in June and selling the July," Emerson said.
  Singapore shares ended little moved with only thin activity as the market waited for the government to announce moves to cushion knocks to the domestic economy from Asia's crisis.
The 30-share Straits Times Industrials Index was off 0.44 points at 1,085.15 at the close after nudging a high of 1,097.92 in the morning.
"People want to see exactly what the measures are. They think the market can't run ahead too much. They want to hear the good news before they buy more," an institutional dealer said.
"Those who bought last Friday thinking the market would move up, saw that it wasn't and took profit quickly," another dealer said.
The government said earlier on Monday there would be no cuts for the time being to employers' or employees' contributions to the compulsory Central Provident Fund pension scheme.
But it said it would make adjustments to property tax payable by companies.
"I think the market is probably expecting more than what the government intends to give. So there is not likely to be a major boost," a dealer said.

Tuesday June 30.
 Two days before the deadline for a plan to wind up failed banks without bankrupting their relatively healthy borrowers, Prime Minister Ryutaro Hashimoto ordered the government and ruling party to consider a U.S.-style solution.
Hashimoto on Tuesday instructed key government and Liberal Democratic Party officials to consider a "bridge bank" system that would temporarily put failed banks under public supervision, ensuring that borrowers not be left in the lurch.
"I want you to consider fundamentally introducing the functions of the U.S.-style bridge bank to create a system that can put a bank under public supervision immediately upon its failure," Hashimoto told the meeting.
The government -- which has recently acknowledged that the estimated 77 trillion yen ($550 billion) in problem loans weighing on the banking sector is a key impediment to economic recovery -- is scurrying to show leadership in solving the crisis before parliamentary elections less than two weeks away.
Japan is also under pressure from the United States and Asian nations to bolster the bank sector to keep a weakening yen and Japanese economy from sending the region into another tailspin.
Hashimoto's LDP has said it will produce a draft bridge bank plan on Thursday.
The United States used the bridge bank system to keep sound borrowers afloat in solving the savings-and-loan crisis of the 1980s. But many observers have questioned whether Tokyo will act boldly enough in adopting its own plan.
Ed Lincoln, who was until recently an adviser at the U.S. Embassy in Tokyo, said in Washington on Monday that he was "somewhat more pessimistic" after talking to government and LDP officials during a trip a few days ago.
Lincoln, now a Brookings Institution scholar, expressed concern that shaky borrowers would get access to more credit under the plan and that it was unclear how vigorously bad loan foreclosure would be pursued.
But the government and LDP efforts apparently cheered up the stock market, where financial shares were actively traded and many participants expressed optimism that the government was finally getting serious about helping the banking system eliminate the problem loans.
"Japan is now addressing the biggest single impediment to economic recovery -- the bad debts," said Coen Kluyver, manager of foreign institutional sales at ING Baring Securities.
Hashimoto told Tuesday's meeting, according to a statement released by the government, that in the event no private receiver bank emerges, the government should consider establishing a bridge bank to protect sound borrowers.
In this case, Hashimoto said using the Deposit Insurance Corp. would be useful for protecting depositors.
A key sticking point in the plan is what to do with "Class Two" loans held by a failed or rescued bank. Those are loans that the bank itself has determined require more care than usual obligations.
"Class One" healthy loans would be transferred to a takeover bank or be maintained by a bridge bank until a private buyer was found. Current law already provides for "Class Three" loans, those about which a bank has "grave concern", and "Class Four" loans, those it deems irrecoverable, to be transferred to the Resolution and Collection Bank.
Hashimoto said the government would urge financial institutions to disclose their bad loans and their restructuring plans, and that the bridge bank must have a strict inspection function.
The meeting was attended by Finance Minister Hikaru Matsunaga, LDP policy chief Taku Yamasaki and the head of the party panel examining the bridge bank issue, Okiharu Yasuoka.
Matsunaga told a regular news conference: "There is still a credit-crunch problem for small- and medium-sized firms, and the problem of bad loans at financial institutions exists as an obstacle."
He said it was important to swiftly dispose of the bad loans, adding that government needed to strengthen the financial sector to regain confidence from overseas. This was an important factor in overcoming Japan's severe economic conditions, Matsunaga added.
Major Pacific Rim markets, with the exception of Singapore, enjoyed a day of soaring investor confidence based in large part on a firmer yen and further developments in Japan's "bridge bank" plan.
Australia enjoyed a boost thanks in great measure to a jump in Rupert Murdoch's News Corp. shares. Hong Kong stocks moved up on the strength of Tokyo and a recovering yen.
In Tokyo, stocks soared more than 3 percent news that Prime Minister Ryutaro Hashimoto had ordered the government and his party to consider a U.S.-style "bridge bank" to clean up Japan's bad-loan mess inspired investor confidence, brokers said.
As a result, the key 225 Nikkei average surged 464.54 points, or 3.02 percent, to close at 15,830.27. Nikkei September futures ended 260 points higher at 15,650.
Hopes that the Japanese government will finally try to solve its own problems, particularly its estimated 77 trillion yen in bad loans, were also boosted by speculation that a permanent income tax cut may be in the offing, they said.
"Stocks have been sold recently due to the slowness of Japan's policy-making, but people on the sell side are starting to hold back," said Masaaki Higashida, deputy general manager at Nomura Securities Co. Ltd.
Gains were led by bank shares and the Nikkei futures.
"Japan is now addressing the biggest single impediment to economic recovery -- the bad debts," said Coen Kluyver, manager of foreign institutional sales at ING Baring Securities.
Hashimoto's LDP will produce a draft bridge bank plan on Thursday.
Shares in many banks gained amid hopes for a healthier financial system. But Long-Term Credit Bank of Japan slipped 16 yen to 81. Traders said this was because the future of the bank, which is in merger talks with Sumitomo Trust & Banking, remained unclear. Sumitomo Trust was up 10 at 620.
  Hong Kong stocks, boosted by the strength of Tokyo shares and a recovery of the yen, closed higher on Tuesday, but gains were pared as traders locked in profits ahead of a public holiday Wednesday, brokers said.
The Hang Seng Index ended up 82.39 points, or 0.97 percent, at 8,543.10 after retreating from a day high of 8,660.13.
The steadier yen triggered light window- dressing by institutional investors ahead of the half year end, said Sunny Chan, senior research manager at Seapower Securities.
"Buying continued in the afternoon to support stock prices, creating a better market atmosphere to welcome political leaders who visit Hong Kong," he said.
Sentiment improved on anticipation that Japan was pushing ahead with plans to clear out bad loans in its financial system, but investors were sidelined for further announcements expected from Japan next week, brokers said.
The yen was quoted at 139.83 to the U.S. dollar in late afternoon after recovering from below 142 in early trade.
Chinese President Jiang Zemin arrived in Hong Kong on Tuesday to attend celebrations to mark the first anniversary of this territory's return to China after more than 150 years of British rule. U.S. President Bill Clinton will arrive in Hong Kong for the last stop of his nine-day China visit on Thursday.
The market will close on Wednesday and reopen on Thursday.

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