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Japan Considers New Economic Stimulus Plan

Prime minister asked ruling coalition leaders to consider crafting an emergency package beyond the $18 billion stimulus plan approved by the lower house Wednesday.

TOKYO (AP) -- Japanese Prime Minister Taro Aso, alarmed by an escalating global financial crisis, called for more action Thursday to bolster the country's faltering economy.

Kosuke Hori, policy chief of Aso's Liberal Democratic Party, said that the prime minister asked ruling coalition leaders to consider crafting an additional emergency package beyond the 2 trillion yen ($18 billion) economic stimulus plan approved by the lower house Wednesday.

In the new plan, officials may turn to public works spending or tax breaks to boost securities trading, Hori said, referring the situation as "extremely urgent."

The current batch of measures, expected to gain final parliamentary approval next week as part of an extra budget for this fiscal year, includes assistance to small businesses and other pump-priming measures to shore up Japan's economy.

But it was introduced in late August before a financial tsunami unhinged Wall Street, triggering a series of calamities in its wake, including the collapse of Lehman Brothers, frozen credit markets, teetering European banks and growing prospects of a global recession.

Even Japan, whose financial companies so far have weathered the financial crisis relatively unscathed, is showing signs of vulnerability.

Government data released earlier Thursday showed that a key barometer of corporate capital spending in Japan plunged in August to its lowest level in more than five years, exacerbating concerns that sluggish exports are edging the world's second-largest economy closer toward recession.

Core private sector machinery orders, which exclude often-volatile orders from electric power firms and shipbuilders, fell 14.5 percent from the previous month to 891.7 billion yen ($8.9 billion), the lowest amount since April 2003.

Japan's stock market was mixed Thursday after suffering its worst one-day loss in two decades Wednesday, when the benchmark Nikkei 225 index plunging 9.4 percent in a regional rout.

The NIkkei dipped 0.5 percent, although the broader Topix rose 0.7 percent, after a string of interest rate cuts by central banks in the U.S., Europe and China. Japan's central bank, whose key rate is at 0.5 percent, said it backed the moves but did not participate.

Since Aso took office last month, local media have focused on when the prime minister would dissolve the lower house of parliament and hold general elections. Newspapers had predicted early polls could come as early as November, though it now appears they will be pushed back.

Aso has repeatedly said that ensuring legislative approval of the proposed stimulus package outweighed political demands for early elections.

Growth in the world's No. 2 economy has come to a virtual halt against the backdrop of higher energy and materials prices, slowing exports and the global credit crunch. Second-quarter gross domestic product, which contracted at a 2.4 percent annual pace, suggests that the country teeters on the brink of recession.

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