Japan's Prime Minister Taro Aso said he'll draft measures to counter a deepening financial crisis that has driven the Nikkei 225 Stock Average to the lowest since 1982. “Unless we take appropriate steps, there will be a major impact on the real economy,'' Aso told reporters in Tokyo. “We must act as soon as possible, starting today.'' Stocks extended declines after the comments on concern financial companies will need an injection of public funds to cushion mounting investment losses. The government bought almost 2 trillion yen ($21.3 billion) of shares from banks between 2002 and 2006 to help them write off bad loans. “The market didn't respond as we had hoped to the planned measures,'' Chief Cabinet Secretary Takeo Kawamura said after the close of stock trading in Tokyo. “We'll continue to monitor stock movements and consider additional measures should these prove effective.'' The government will seek stronger oversight over the short- selling of Japanese stocks, Aso said. The Financial Services Agency said it will ban so-called naked short-selling starting Nov. 4. Short-sellers borrow shares and sell them, betting the price will fall and they'll be able to buy them later, return them to the lender and pocket the difference in price. In naked short- selling, traders never borrow the shares, raising concern that the markets will be flooded with sell orders to drive down prices. Japan is also ready to take action on currencies, said Finance Minister Shoichi Nakagawa. He was speaking after the Group of Seven said it was concerned about the recent excessive movements of the yen, which surged almost 30 percent against the euro in the past three months.
