5:00AM New York, 7:00PM Tokyo – The Bank of Japan pumps 800 billion yen in market. Mitsubishi UFJ and Morgan Stanley may merge Japanese brokerage units. Automakers stocks plunge on weak U.S. sales.

Japan stock indexes traded in negative territory on general market weaknesses sparked by fears that the global economy will not be able to avoid a recession. A sharp decline in auto sales in the U.S. worried the investors.

Market Sentiment

In Tokyo trading Nikkei 225 fell 1.94% or 216.62 to 10,938.14, and the broader Topix Index slipped 2.7% or 29 to 1,047.97.

In the first section of the Tokyo Stock Exchange 23 billion shares worth 2.3 trillion yen were traded and in the second section 926 million shares worth 4.5 billion yen changed hands.

Of the Nikkei 225 index stocks, 40 rose, 183 declined, and 2 were unchanged. Fast Retailing led advancers in the index with a rise of 13.6% after reporting that sales at its 672 Uniqlo stores in Japan soared 21% from a year ago.

Bank of Japan Injects 800 billion yen Money Markets

The Bank of Japan today injected 800 billion yen into the money market as part of open market operations that are meant to put the lid on soaring interest rates.

Banks are increasingly reluctant to lend each other money due the uncertainty created by the sub-prime mortgage crisis.

Japan’s overnight call rate averaged 0.46% today before the intervention. The BOJ is currently making aggressive efforts to liquidate the market in order to ensure that borrowing costs remain affordable for business and households.

Mitsubishi UFJ Refutes Links With Morgan Stanley

Mitsubishi UFJ Financial Group today rebutted claims that the lender and U.S. investment bank Morgan Stanley are mulling merging their brokerage units in Japan. Brokerage analysts have been expecting such a move since the lender acquired 21% stake in U.S. investment banker for $9 billion.

Mitsubishi UFJ announced yesterday that it will buy a 19.9% stake in British investment company Aberdeen Asset Management Plc.

Yen Rises

The yen rose 0.84% against the dollar to 105.85 from 105.88 yesterday. The worries of falling exports and weakening in the U.S. dollar are concerning the foreign exchange traders.

Gainers & Losers

Fast Retailing led advancers in the Nikkei 225 index shares with a rise of 13.59% followed by increases in UNY Co. Ltd. of 6.05%, in Nichirei Corp. of 4.96%, in Sumitomo Chemical Co. of 3.95%, and Sumitomo Osaka of 3.95%.

Fast Retailing advanced after reporting that sales at its 672 Uniqlo stores gained 21% from a year earlier.

NGK Insulators led decliners in the Nikkei 225 index shares with a fall of 11.08% followed by losses in Nikon Corp. of 10.24%, in Nippon Express of 9.81%, in Minebea Corp. of 9.14%, and Konica Minolta of 8.67%.

Technology stocks and exporters slid on the gloomy outlook of the global economy. Komatsu shed 8.12% and Fujifilm declined 7.02%.