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Japan shares up on stimulus plan Japan outlines $150bn stimulus
(about 4 hours later)
Shares in Tokyo have risen on details of an economic stimulus plan the government is expected to pass. Japan has unveiled its record $150bn (£105bn) stimulus package as it seeks to revive its flagging economy.
Japan's ruling Liberal Democratic Party revealed details of bigger-than-expected spending of 15.4 trillion yen ($154bn; £105bn), or 3% of GDP. Prime Minister Taro Aso announced the package, worth about 3% of its gross domestic product, in Tokyo after the ruling party approved the measures.
The spending contains measures to encourage the use of solar panels and fuel-efficient cars. The 15.4tn yen package, to be formally unveiled on Friday, includes measures to boost fuel-efficient vehicles and consumer electronics.
Shares in Tokyo gained as details of the stimulus plan were announced.
'Opportunity'
"Only countries that can turn a challenge into an opportunity can prosper in the future," Mr Aso said.
The stimulus plan, the government's third in the past year, is bigger than many analysts had expected.
The country is going through its worst recession since World War II as the global financial downturn sapped demand for its exports.
Japan's benchmark Nikkei 225 index closed at a three-month high, rising 3.74% to finish at 8,916.06.Japan's benchmark Nikkei 225 index closed at a three-month high, rising 3.74% to finish at 8,916.06.
Shares in carmakers and solar power-related firms gained after details of the draft plan were released.Shares in carmakers and solar power-related firms gained after details of the draft plan were released.
The market in Hong Kong also rose. The Hang Seng Index was up 2.3% at 14,808.78. "This may contribute to GDP for a year," said Masamichi Adachi, an economist at JP Morgan. "The consequences over the longer term are negative as we are piling up more of a fiscal burden. Bond issuance will go up from here on."
'Temporary measures'
The package is set to create a financial safety net for temporary workers, boost struggling firms and support regional economies.
It has also been reported that there will be measures to support nursing and medical services, and support elderly care.
"The contents look like temporary measures to front-load demand, but they do not pay attention to increasing productivity on the supply side," said Masamichi Adachi, an economist at JP Morgan.
"This may contribute to GDP for a year. The consequences over the longer term are negative as we are piling up more of a fiscal burden. Bond issuance will go up from here on."
The package came out as figures showed Japan's machinery orders unexpectedly rose in February thanks to gains in the services sector.The package came out as figures showed Japan's machinery orders unexpectedly rose in February thanks to gains in the services sector.