Japan looks for market stability after quake

Japan's central bank will hold an emergency meeting tomorrow to discuss how to maintain financial stability in the markets following the devastating earthquake and the nuclear alert.

The authorities said yesterday they want to ensure there is enough liquidity in the financial system so that companies and investors can start rebuilding. They will also put emergency plans in place for the public to have access to cash as so many banks and cash machines have been wiped out by the quake.

Japan's biggest companies have started to repatriate their assets from abroad, selling dollars and other foreign currencies, while investors are also likely to sell US and European bonds this week to prepare for the rebuilding costs which will run into billions.

The Tokyo stock market will open tomorrow, after plans to close it for a few days to prevent panic selling were dropped.

Carl Weinberg, an economist at High Frequency Economics, said putting a price on the tragedy is impossible as the area that has been hit by the earthquake and tsunami contains key ports used by the country's huge fishing fleet as well as for freight. Many of Japan's big auto manufacturers are also based nearby.

Some analysts claim the cost could be as high as the 10 trillion yen (£76bn at today's exchange rates) that Japan spent after the Kobe quake in 1995 and the cost to insurance companies is already estimated to be at least £30bn.

Mr Weinberg said: "There is no way to assess even the direct damage to Japan's economy. The economic aftershocks could affect the world's economic well-being."

Stock markets, still reeling from events in Libya and the Gulf, closed sharply lower on Friday and trading is likely to stay nervous this week.