Japan quake and tsunami causes stock market drop

The 8.9 magnitude earthquake and ensuing tsunami that hit Japan at 0546 GMT today has caused a fall in Asian stock markets and the yen. The dollar gained 0.5 per cent against the yen to 83.275, and then fell back again.

Japan's Nikkei index closed 1.7 per cent lower and fell a further three per cent in after-hours trading in Singapore.

David Cohen, a regional analyst for Action Economics, said that in the short term, the damage could knock one per cent off the country's GDP. In the long term, however, "the rebuilding exercise will be positive for growth with all the construction taking place".

Moody's in Singapore remained confident that Japan would be able to handle the disaster, saying that there should be "no impact on government's finances and therefore Japan's sovereign rating". ·