BOJ supports giving cash (Reuters) (14-03-2011)

TOKYO - Japan's central bank doubled its asset buying scheme to 10 trillion yen and supplied record funds to banks on Monday to shore up confidence in the economy.

The central bank said it was still sticking to its view that the world's third largest economy would resume its moderate recovery, though it warned about a likely drop in economic output and vowed to do whatever necessary to limit the economic fallout.

Analysts said this time the threat to the $5 trillion economy was compounded by a continued risk of a nuclear catastrophe as engineers battled to avert a meltdown at a quake-stricken nuclear plant 240 kilometres (150 miles) north of Tokyo.

The deeply unpopular government of Prime Minister Naoto Kan is under pressure to contain public debt that is already twice the size of the economy, which struggles to sustain a modest recovery from a deep and long recession. The prospect of Japanese companies and insurers repatriating funds from abroad and boosting an already strong yen further darkens the economic outlook.

The BOJ offered to pump a record 15 trillion yen ($183 billion) in the banking system, well above the usual 1-2 trillion, to assure investors that markets will function properly. Combined with funds that will be available in further dates, the BOJ offered near 22 trillion yen in market operations on Monday.

Tokyo's stocks plunged more than 6 percent after the market reopened on Monday as investors tried to gauge the huge economic cost of Friday's quake and tsunami.

Source: Reuters