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To: Alex who wrote (12432)	5/31/1998 3:25:00 PM
From: goldsnow	Respond to of 116897

Stocks slide; dollar near 7-year high v yen 07:27 a.m. May 31, 1998 Eastern By Jonathan Oatis NEW YORK (Reuters) - Stocks slumped on concerns over Asia's economic woes, Pakistan's nuclear tests and Russia's financial tremors, but the dollar jumped to its highest level against Japan's yen in nearly seven years. Bonds were mostly higher. Oil prices rose on signs that world producers may be considering further steps to cut back swollen supplies in order to prop up prices. The Dow Jones industrial average fell 70.25 points, or 0.78 percent, to 8,899.95 on Friday. The blue-chip index shed 214.49 points for the week, its second-biggest point drop for the year. But in the broad market, advancing issues led declines 1,711 to 1,205 on moderate volume of 552 million shares on the New York Stock Exchange. The Nasdaq composite index was off 15.75 points, or 0.88 percent, at 1,778.87. Analysts said investors were not prepared to stick their necks out ahead of the weekend amid the global uncertainty. The Dow shed 150 points Tuesday alone in a pullback which analysts say is an inevitable and healthy reality check for highly valued stocks. The plunge was triggered by rekindled concerns over Asian economies, the slide in the yen, turmoil in Russian stocks, and the holding of nuclear tests by Pakistan to match India's. ''There is a lot of concern as we head into the weekend surrounding the Asian, Russian and Indian potential crises,'' said Tony Dwyer, chief market strategist at Ladenberg Thalman. In Russia, stocks and the ruble were under pressure from worries about the nation's deteriorating foreign exchange reserves. As President Boris Yeltsin tried to boost confidence in Russia's economy and financial markets, Moody's Investors Service Inc. cut the country's long-term foreign currency debt rating, citing Russia's economic problems. The U.S. stock market is also nearing the pre-announcements season when companies warn if current quarterly earnings may disappoint Wall Street. ''Stocks are probably going to go through a short-term choppy period as people wait for the second-quarter earnings numbers to come out to get a sense of the impact of Asia on the earnings of the companies,'' said Jack Shaughnessy, chief investment strategist at Advest Inc. U.S. Treasury bonds ended mostly higher, with the key 30-year bond rising 11/32, or $3.4375 on a $1,000 bond. The yield, which moves in the opposite direction of the price, fell to 5.8 percent from 5.83 percent at Thursday's close. The dollar shot to its highest level against the yen nearly seven years amid signs that Japan's battered economy was worsening -- but talk that the Bank of Japan would move to defend the currency capped the rally. In late trading, the dollar was off the 139.23-yen high reached in August 1991, but still higher, at 138.85, than Thursday's 138.74. The dollar's rise, along with poor Japanese economic indicators and Pakistan's nuclear testing, pushed down Tokyo's 225-stock Nikkei average. The index fell 125.77 points, or 0.80 percent, to 15,670.78. The U.S. currency also rose against Germany's mark after a downgrade in the rating for Russian debt. Germany is heavily invested in Russian markets. The dollar rose to 1.7865 marks from 1.7797. At the New York Mercantile Exchange, crude oil for July delivery ended 35 cents higher at $15.20 a barrel, as buying from two large trading houses in the last hour lifted prices. Traders said the buying was spurred by a report quoting Algeria's oil minister, Youcef Yousfi, as saying members of the Organization of Petroleum Exporting Countries and other oil producers had entered talks aimed at further production cuts. In other overseas markets, Britain's FTSE 100 index ended three sessions of declines by rising 8.4 points, or 0.14 percent, to close at 5,870.7. Copyright 1998 Reuters Limited.

To: Alex who wrote (12432)	5/31/1998 3:29:00 PM
From: goldsnow	Read Replies (1) \| Respond to of 116897

INTERVIEW-Japan needs inflationary boost ahead of reforms 02:28 a.m. May 29, 1998 Eastern By Risa Maeda TOKYO, May 29 (Reuters) - Japan's economy risks a crisis threatening top corporations if it does not introduce inflationary policies ahead of planned structural reforms, a respected Japanese currency dealer said Friday. ''Japan should buy time by giving an inflationary boost to the economy -- weakening the currency and raising liquidity in the money market -- to keep the planned reforms going,'' said Takeshi Fujimaki, Tokyo branch manager of Morgan Guaranty Trust. Fujimaki said in an interview with Reuters there was a risk people might enjoy the economic spurt and forget about the need for reforms, but added: ''Despite such danger, I'm worried about how Japan and the world will be affected without inflationary measures.'' Japan faces a crisis of heavier magnitude than last November, when a liquidity shortage helped topple several major corporations including Yamaichi Securities, he said. ''It will be a big crisis bringing extremely high unemployment,'' Fujimaki said. Japan currently faces its most severe job situation in decades, with government data announced on Friday showing unemployment hit a record 4.1 percent in April, up from 3.9 percent in the previous month. Fujimaki said the situation in Japan threatens neighbouring nations whose economies largely depend on the Japanese economy. ''A weaker yen is not a problem in Asia. Japan's inability to expand domestic demand is the problem,'' Fujimaki said. Imports from crisis-hit Asia did not increase significantly in the past year despite a fall in regional currencies against the yen that made their products far more competitive. A top priority for Japan right now is to get rid of deflationary pressure on prices, Fujimaki said. He said spurring inflation would lighten the burden of ballooning liabilities by weighing on asset prices. He said this could aid domestic investors ranging from the government to individuals whose balance sheets were hurt by the collapse of asset prices after Japan's late-1980s bubble era. A weaker yen also would make Japanese assets attractive for foreign investors and an expectation of rising prices would induce consumers to loosen purse strings, he added. Fujimaki said Japan needs to take immediate measures since its much-touted ''Big Bang'' and other tax and economic reforms, designed to liberalise its markets, would take years to take effect. He said that even the government's 16 trillion yen ($115 billion) economic stimulus package announced in late April may not work since the Bank of Japan has appeared unwilling to take radical steps needed, such as considering negative interest rates. Japan's monetary authorities have also refused to let the yen weaken, Fujimaki said, adding that without central bank intervention the yen could fall to 160-180 to the dollar by the end of 1998. Though a stronger dollar could stir trade friction with the United States as the U.S. bilateral trade deficit balloons, Fujimaki said the risks at stake are even larger. ''The trade imbalance is now a minor issue in the rest of the world. People are concerned if Japan or Asia may trigger a world depression,'' Fujimaki said. He said Japan's inconsistent policies mean the latest stimulus package is unlikely to reproduce the economic boost that followed a 15.25 trillion yen package in February 1994. That package gave Japan its last period of healthy growth in the 1994/95 fiscal year but was spurred by a weakened yen and the Bank of Japan's cut in its official discount rate to 1.75 percent from 2.5 percent in September 1993, Fujimaki said. The discount rate has been pegged at a record low 0.5 percent since September 1995. ($1-139 yen) ((Tokyo Treasury Desk, +81-3 3432 8570