Japan faces 'uncertainty' from financial crisis: BoJ

---

TOKYO, Sept 29 (Reuters): Japan will likely avoid a deep slump from the global credit crisis but faces "considerable uncertainty" and downside risks to growth, a top central bank official said Monday.
The possibility of a dive on the back of the Wall Street crisis "is rather small," Bank of Japan (BoJ) deputy governor Kiyohiko Nishimura told a news conference.
But "the outlook for economic activity is accompanied by considerable uncertainty and various risk factors could influence the outlook," he said.
The central bank "is attentive to downside risks to economic growth," he added.
Despite being relatively insulated from the US-born subprime crisis, Japan's export-driven economy is teetering on recession due to a cooling global economy and tepid domestic spending.
Nishimura lauded recent investments by Japanese banks that have embarked on a buying spree of US banks, which have crumbled due to massive mortgage-related losses and failure to secure funds.
"Each financial institution in Japan is trying to improve its earnings and in doing that they are looking for the most appropriate way to utilise their resources," Nishimura said. "So in that sense it is desirable."
Mitsubishi UFJ Financial Group last week said it would buy 20 per cent of Morgan Stanley, while Japan's top brokerage Nomura Holdings snapped up bankrupt Lehman Brothers' operations in Asia, Europe and the Middle East.
These activities are "desirable if they will... result in the improvement of market efficiency and transparency, which will contribute to the future stability of markets," Nishimura said.
The central bank has kept interest rates unchanged at 0.5 per cent, the lowest among major economies since February 2007 as the financial crisis has darkened the world economic outlook.