Japan's Aso doesn't see major local market disruptions on Greece turmoil

[TOKYO] Japanese Finance Minister Taro Aso said on Monday he did not think declines in Japanese stocks would spread or that the yen would suddenly spike due to turmoil triggered by a deepening crisis in cash-strapped Greece.

Mr Aso, speaking to reporters, said that if Greece left the euro zone, the impact on markets could be big, but less so if Athens defaulted and remained in the euro zone.

Japan's Nikkei share average slipped to a one-week low due to rising risks of Greece defaulting on its debts. The yen was stable versus the dollar, but Japanese policy makers are likely to remain on edge as they try to prepare for the impact of what could be a messy resolution to Greece's debt crisis.

"Greece came very close to securing a bailout but problems came up close to the finish line," Mr Aso said. "Stocks are falling now, but I don't see further declines in stocks or a sudden surge in the yen."

After bailout talks between the leftwing government and foreign lenders broke down at the weekend, the European Central Bank froze vital funding support to Greece's banks, leaving Athens with little choice but to shut down the system to keep its banks from collapsing.

The eurozone's problems risk undermining Japan's economy as a sell-off in Japanese shares could hurt consumer sentiment and wild swings in currencies could disrupt business plans.

Developments in the Greek debt crisis and the Asian financial market reaction so far have yet to alarm the Bank of Japan enough to consider offering emergency liquidity, officials familiar with its thinking say.

REUTERS