JAPAN's Prime Minister Taro Aso last night unveiled a five trillion yen (US$51 billion or S$74.8 billion) package of emergency measures designed to cushion Japanese institutions against shockwaves from the global financial crisis, bolster the Tokyo stock market and ease the pain of households in the face of imminent economic recession. The measures came as Germany also announced plans to bolster its economy and as Russia pumped money into its plunging stock market.

'A harsh storm seen only once in 100 years is raging,' Mr Aso said after announcing Japan's second fiscal stimulus package in the space of two months. The latest package includes two trillion yen in the form of novel cash payouts to families, to be made through municipal offices. These are intended to stimulate consumption faster than tax cuts.

'Under such circumstances, I am certain that what is most important is to remove uncertainties from the lives of people,' said Mr Aso, implying that he would delay calling a snap election beyond the expected date of next month and long enough to allow his government to implement the emergency measures.

Even before his announcement, Tokyo stock prices soared dramatically, buoyed by strong expectations that the Bank of Japan's Policy Board, at its meeting today, will cut the central bank's policy lending rate for the first time in seven years, and possibly take other steps to ease monetary policy. The meeting will start unusually early and an announcement of easing measures could come at the start of Tokyo trading, some speculated.

Stock markets also rallied elsewhere in Asia, buoyed by hopes that concerted rounds of monetary easing and unprecedented large fiscal stimulus packages by G-8 nations can stave off a severe global recession. However, speaking in Tokyo yesterday, World Bank vice-president for East Asia Jim Adams warned that the region could not expect to return to strong export-led growth in the foreseeable future.

Under the package announced by Mr Aso, the government payouts to families will amount to around US$600 for a family of four. It will also expand tax relief on housing loans and cut highway tolls. Additionally, there will be cuts in corporate taxes for small businesses and expanded government guarantees on loans to small firms to help fund-raising.

In order to help the Japanese financial system, the government will revive legislation allowing it to inject funds into banks in order to boost lending to small firms. It will also be flexible in enforcing current rules on financial institutions' capital adequacy ratios.

As a means to boost the Tokyo stock market, the government will consider resuming buying of shares held by banks through a government body. It has asked the Bank of Japan to do the same. The government will also extend preferential tax treatment for dividend income from stocks beyond the end of this year.

These measures will require new legislation and Finance Minister Shoichi Nakagawa suggested that further stock boost measures may be taken. The Tokyo market crashed to a 26-year low this week and although it has recovered 26 per cent from that trough, fears persist that Japanese exporters' competitiveness has been seriously undermined by the strong yen.

The 10 per cent or 817.86-point jump in the benchmark Nikkei 225 Average yesterday to 9,029.76 came as the yen fell back to 99 to the US dollar from a 13-year high of 90 touched recently, and as it weakened also against other leading currencies in anticipation of a drop in Japanese interest rates today.

Both moves reflect the critical importance that the yen exchange rate has assumed for investors, given the currency's key role in underpinning global markets via so-called yen 'carry trades' whereby yen are used to finance international purchases of stocks, property and other assets, analysts said.

Recent rate cuts by leading central banks - including the US Federal Reserve's 50 basis point cut on Wednesday, and further cuts expected in Britain and Europe next week - have closed the interest rate differentials that made carry trades attractive. But with renewed easing in Japan's monetary policy, market-boosting carry trades could resume, dealers said last night.