3:22 AM
TOKYO |
TOKYO (Reuters) - Financial leaders of the world's richest countries will hold talks on Friday on ways to calm global markets roiled by Japan's nuclear plant crisis and concern it will unravel the world economy's fragile recovery.
Rising alarm over the unfolding disaster in Japan following an earthquake and tsunami has sent shivers through world markets, hitting shares and other riskier assets, such as commodities, while prompting investors to scurry for the safety of government debt.
The yen soared in disorderly trading to a record high against the dollar on speculation Japan will repatriate billions of dollars in overseas funds to pay for massive reconstruction that is expected to be much costlier than the bill following the Kobe earthquake in 1995.
"I think the world economy is going to go right down and it has happened at a time when financial markets are still fragile," said a central banker of a Group of Seven country.
The comments, made on condition of anonymity, are a testimony to the degree of concern among top policymakers about the potential impact of Japan's triple disaster and in particular its race against time to prevent a nuclear meltdown.
The G7 financial ministers and central bankers will hold a telephone conference call around 2200 GMT on Thursday (7 am Tokyo time Friday), Japan's finance minister, Yoshihiko Noda, said as financial markets braced for potential currency intervention following the yen's surge.
"I don't think stock and currency markets are in a state of turmoil," Japan's economy minister, Kaoru Yosano, said in an interview with Reuters.
"We would like to get psychological support from the G7," he said.
The triple disaster, unprecedented in a major developed economy, is already disrupting global manufacturing.
SUPPLY CHAIN
Makers of equipment for mobile telephones to carmakers and chipmakers have warned of a squeeze on their businesses given Japan's crucial role in many supply chains that keep global commerce ticking over.
The technology sector felt an immediate impact after Friday's quake and tsunami since Japan makes around a fifth of the world's semiconductors.
NAND flash memory chips, used in various electronic gadgets, soared 20 percent on Monday.
On Thursday, electronic conglomerate Toshiba Corp said an assembly line that makes LCD displays for smartphones and other devices will be shut for a month to repair machinery damaged by the quake.
The company's shares are already reeling on speculation its nuclear power business will suffer after governments globally have raised doubts about the industry's future.
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