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March 14, 2011    

Global stocks hit by Japanese disasters

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by Kay Murchie
Global stocks hit by Japanese disasters

The Japanese Government has spoken of the 8.9 magnitude earthquake and the 13-foot tsunami which hit the northeast coast of Japan last week.

Prime Minister, Naoto Kan, described it as the worst crisis since the Second World War.

The disasters are set to cause “considerable” economic impact as the country faces a massive clean-up operation, a potential nuclear meltdown and power shortages - millions are still without water and electricity in parts of northern Japan.

It is a further blow to the world’s third largest economy, which contracted by 1.3% in the fourth quarter of 2010 and whose economy faces headwinds due to deflation and a mountain of debt.

Meanwhile, the quake, which has taken more than 10,000 lives, has sent shares across the globe into freefall.

Today, the Nikkei index ended down 6.98% at 9460 points - way below the crucially important 10,000 mark.

Companies hit include carmaker Nissan, which was down 9.5% after it closed all its plants. Toshiba lost 16%, while Hitachi and Tokyo Electric Power Company fell 16% and 24% respectively.

European shares also fell in early trading today with insurers, in particular, hit hard over fears relating to the costs of the disaster.

Risk modelling company AIR Worldwide said the insurance cost of the quake could reach $35 billion even before the tsunami is accounted for.

In the meantime, the Bank of Japan has tried to allay fears and said it will pump 15 trillion yen (£114 billion) into the banking system to stabilise markets.

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