Japan to take fresh steps to shield its economy from global crisis

---

TOKYO, Oct 27 (Reuters): Japan pledged fresh measures Monday to try to shield the world's second-biggest economy from the global financial crisis and said the Group of Seven (G7) would issue a joint statement on the yen.
A flurry of comments from top lawmakers came as investors dumped banking stocks on expectations they need fresh capital to offset losses in their stock portfolios.
The Nikkei average hit a 26-year low just before Prime Minister Taro Aso said the government will expand its bank bailout scheme and strengthen regulations on short-selling of stocks.
He said the G7 rich nations would soon issue a joint statement. The finance minister, Shoichi Nakagawa, said the statement would be issued Monday and say that the group will cooperate appropriately on foreign exchange markets.
Only the yen, which soared last week to multi-year highs against the dollar and the euro as investor unwound risk, would be mentioned in the G7 statement, Nakagawa said.
The comments came after the prime minister met with ruling party lawmakers to discuss the financial storm that has toppled banks world wide but which had appeared, until recently, to have largely skirted Japan.
Economics Minister Kaoru Yosano said the prime minister had ordered action in Japan to stabilise the stock market and strengthen the financial system.
The rapid decline in share prices, as well as disorderly currency moves, will hurt the Japanese economy, Nakagawa said earlier.
Underlining concerns about the banks, the economics minister Sunday call for the country's bank bailout scheme to be increased several-fold to nearly $110 billon.
"The government will have to do something for banks," said Koichi Ogawa, chief portfolio manager at Daiwa SB Investments.
"The problem here is that the stock market has fallen, it has nothing to do with derivatives or anything like that. As stocks have dropped, banks are faced with rising paper losses."
Tokyo's benchmark Nikkei share average briefly dropped as low as 7,603 Monday, its lowest point since 1982.
The benchmark has lost almost a third of its value this month alone and about half so far this year, hurt in part by the yen's recent rise to its highest in nearly 13 years.