12:30 AM
TOKYO |
TOKYO (Reuters) - Japanese leaders tried to calm panicky financial markets on Tuesday as a deepening nuclear power crisis looked certain to increase the toll on an economy already convulsing from the impact of Friday's earthquake and tsunami.
Tokyo's stock market plunged more than 14 percent as the stricken Fukushima nuclear power plant was hit by two explosions and a grim-faced Prime Minister Naoto Kan warned the nation that radioactivity levels had become "significantly" higher.
Even before Tuesday's dramatic events, economists had estimated that recovery and reconstruction costs would reach at least $180 billion, or 3 percent of the economic output of the world's third-biggest economy. Others suggested the cost could amount to 5 percent of output.
In the face of the country's biggest crisis since World War II, Japanese leaders urged calm.
"Japan's production and the economic power have not fallen. I think the market confusion will calm down in a short time," Economics Minister Kaoru Yosano said at a press conference.
Finance Minister Yoshihiko Noda said the market's fall was the response to "temporary factors."
The prime minister called for those within 30 km (18 miles) of the facility north of Tokyo to remain indoors, underscoring the worsening of Japan's nuclear crisis, the world's most serious since the Chernobyl disaster in Ukraine in 1986.
"There has been a fire at the No. 4 reactor and radiation levels in the surrounding area have heightened significantly. The possibility of further radioactive leakage is heightening," Kan said in an address to the nation.
"We are making every effort to prevent the leak from spreading. I know that people are very worried but I would like to ask you to act calmly."
Still, financial markets reflected a mounting fear about the radiation risk in a country already reeling from the quake and tsunami.
The Fukushima nuclear power plant at the center of the crisis, operated by Asia's biggest utility Tokyo Electric Power Co, is 240 km (150 miles) north of Tokyo, the political and commercial heart of the country.
TEPCO shares have hardly traded as sell orders flooded the market. But at the close of trading on Tuesday, it was down 42 percent from its Friday close.
MARKETS TUMBLE
The Nikkei fell as much as 14 percent at one stage, before closing down 10.5 percent, its biggest percentage fall since October 2008 during the height of the financial crisis.
At the lows of the day, the market had lost a fifth of its value since Friday.
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