5:00AM New York, 7:00PM Tokyo – Japan stocks in a record plunge in 21 years tracked losses in the U.S. Investors worry that rising bank losses will require more capital injection for banks. Japan bankruptcies jump 34% to 1,408 cases in September.

Japan market averages plummeted sharply after bankruptcies increased 34% in September and IMF revised estimate of losses on U.S. loans and securities to rise to $1.4 trillion from $1.3 trillion.

Market Sentiment

In Tokyo trading Nikkei 225 fell 9.8% or 952.58 to 9,203.32, and the broader Topix Index slumped 8% or 78.60 to 899.01.

In the first section of the Tokyo Stock Exchange 11.2 billion shares valued at 934 billion yen were traded and in the second section 332 million shares valued at 2.4 billion yen changed hands.

Of the Nikkei 225 stocks 224 declined, and one was unchanged. Unitika Ltd. led decliners in the index shares with a fall of 20.83%.

Japan Bankruptcies Rise 34% in September

Tokyo Shoko Research corporate bankruptcies climbed 34% to 1,408 cases in September as the credit market freeze curtail lending and shrink economic activities.

Failures in construction and manufacturing rose 41% and 44% respectively in the month under review, while bankruptcies in transportation surged 133%. Finance and insurance bankruptcies also rose 56% in the month.

Japan Passes 1.81 trillion yen Supplementary Budget

Nikkei News reported that House of Representatives Budget Committee in Japan cleared a 1.81 trillion yen supplementary budget to provide a stimulus to the economy. Bank lending remains tight and real estate markets are soft.

U.S. Loan Loss Estimate Revised to $1.4 trillion

The International Monetary Fund reported on its Web site yesterday in the Global Financial Stability Report (GFSR) that there was need for coherent and decisive interventions to stem the current deleveraging from being """"disorderly and costly to the real economy"""".

According to GFSR, the losses on the U.S. mortgage securities are expected to increase to $1.4 trillion from an earlier estimate in April of $945 billion.

The report prescribes a three-part approach to stave off disorderly deleveraging through the government purchase of illiquid and impaired assets from lenders, injecting capital into viable institutions that are struggling and rescuing dysfunctional funding markets.

The Fund projects that financial institutions need to raise $675 billion, but however noted that the interbank lending has seized.

The GFSR estimates that credit growth in the United States, the euro area, and the United Kingdom will ease to near zero over the next year before regaining in 2010.

Jaime Caruana, Director of IMF''s Monetary and Capital Markets Department said, """"A comprehensive approach, if consistent among countries, should be sufficient to restore confidence and proper functioning of markets and avert a more protracted downturn in the global economy.""""

Yen Rises

The yen today breached the psychological mark of 100 yen against the dollar on falling Asian stocks.