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The Tokyo Stock Exchange was shaken Tuesday by successive plunges in share prices around the globe; trading closed with the benchmark Nikkei average falling to 16,312.69, the lowest since July 1995.

The 725.67-point fall, representing 4.3 percent, from Monday was the year’s third biggest decline. The Topix index of all issues came to 1,263.11, down 49.34 points.

Top government and political figures, including Prime Minister Ryutaro Hashimoto, attempted in the morning to prevent panic selling by reiterating that authorities will continue to keep close tabs on the TSE following the plunge Monday in New York. Hashimoto told reporters that the NYSE drop in percentage terms was much less than the free fall experienced on “Black Monday” 10 years ago.

But market watchers generally said the plunge in share prices would raise more doubts about the flagging domestic economy. Some analysts predicted that the key Nikkei index might even fall below the 16,000 line. The Hashimoto administration is likely to face increasing pressure to take stimulus measures that would regain investor confidence in the economy.

The Nikkei average of 225 blue chips could not stay above the key 17,000 barrier after the huge overnight slides in Europe and the U.S. that were triggered by the Hong Kong stock plunge last week. Hong Kong, opening two hours after trading began in Japan, had another gloomy day Tuesday. The unabated fall in the key Hang Seng Index kept the slide in Tokyo going for most of the day.

Koichi Kato, secretary general of the ruling Liberal Democratic Party, said people “need not and should not” panic over the drop in New York, pointing out that many observers had been saying for months that stock prices there were too high and calm analysis of the situation was needed. New York share prices have been widely seen as too high for the past few months, Kato said.

Speaking at a news conference in the morning, Finance Minister Hiroshi Mitsuzuka stressed that economic fundamentals in the United States remain solid despite the sharp selloff on Wall Street. Japanese fundamentals are also secure, he said.

Authorities will monitor the situation carefully and take steps after closer analysis, he said later in the day, adding that Eisuke Sakakibara, vice finance minister for international affairs, was in close contact with other nations. A senior Finance Ministry said in the evening that preparations are under way for a meeting of deputy ministerial-level finance officials of several Asian nations sometime next month, ahead of the annual summit of the Asia-Pacific Economic Cooperation forum in Vancouver, British Columbia.

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