THE GLOBAL financial meltdown may have claimed another casualty, Japan's long-awaited general election, which has been shelved until next year, according to local news reports.
With Tokyo stock prices tumbling and storm clouds gathering over the world's second largest economy, Japanese prime minister Taro Aso has cancelled a plan to announce the general election this week, according to the Kyodo News.
"For the time being, I just could not create a political vacuum. I will put priority on economic and financial measures," a Liberal Democratic (LDP) source close to the prime minister quoted him as saying.
Tokyo stocks have plunged by 50 per cent so far this year, briefly falling yesterday to a 26-year low before rebounding by 6.4 per cent in afternoon trading.
Even more worryingly for an economy heavily dependent on export-led growth, the yen is rising sharply against other currencies, slashing the profits of blue-chip giants Sony, Toyota and Canon. Fresh concerns have also emerged that Japan's banking sector, until now thought to be immune to the financial tsunami, may be weakening.
These concerns arose after the giant Mitsubishi UFJ Financial Group announced plans this week to recapitalise by more than $1 billion (€802 million).
The faltering Japanese economy has so far shrugged off the government's emergency measures, including a ban yesterday on short-term share selling.
Mr Aso was widely expected to dissolve the more powerful lower house at the end of this month and call a general election for November 30th, the date reportedly favoured by the LDP's coalition partner, New Komeito.
Although not required to go to the polls until 2009, the government is desperate to end a parliamentary gridlock orchestrated by the opposition Democrats, who control the upper house.
The Democrats also want an early election, believing they have the best chance in a generation of grabbing power from the struggling LDP.
Mr Aso yesterday denied the reports that the election had been postponed. He is expected to make a final decision on the date later this week.