Stocks started lower following an overnight drop on Wall Street and news that medium-sized Japanese trading firm Okura and Co would file for bankruptcy. Okura said failed investments in real estate during the 1980s speculative ``bubble'' era and sagging earnings had Left it with debts totaling 257.7 billion yen. The dollar bought 142.94 yen in late-afternoon trading, up 0.39 yen from late Thursday in Tokyo but lower than its late New York rate of 143.19 yen overnight.

The stock market's slide was partly stemmed by reports that the government is preparing to support a merger between Long-Term Credit Bank of Japan and Sumitomo Trust andBanking with an infusion of public money. LTCB shares soared 18 yen, or 32 per cent, to 74 yen and were the most actively traded on the exchange on Friday. Last week the price sank to a record low of 37 yen. The broader Tokyo Stock Price index of all issues listed on the first section of the exchange slipped 5.16 points, or 0.44 per cent, to 1,176.51.

The Topix closed down 2.04 points, or 0.17 per cent, the day before. The US dollar rose as high as 143.50 yen in early Tokyo trading on Friday on news of US air strikes against suspected terrorist targets. But lingering speculation that Japan would intervene in currency markets to support the yen, weighed on the dollar, traders said.

US president Bill Clinton announced on Thursday he ordered missile attacks on sites in Afghanistan and Sudan linked to Osama Bin Laden, a Saudi millionaire whom US officials call a major sponsor of terrorism. The attacks were in response to the August 7 bombings at the US embassies in Nairobi and Dar Es Salaam, which killed 257people and injured more than 5,500. The US currency is regarded as a safe haven in times of international unrest.

In the fixed-income security market, the yield on the benchmark number 182 10-year Japanese government bond fell to 1.180 per cent from 1.190 per cent on Thursday, driving its price up to 111.87 yen from 111.80 yen.

HK share prices close higher

Prices on the Hong Kong Stock Exchange slumped on Friday after two straight sessions of sharp gains. The Hang Seng index, the market's key indicator of blue chips, fell 214.92 points, or 2.8 per cent, closing at 7,527.61. On Thursday, the index had gained 1.6 per cent. Turnover fell to 4.97 billion Hong Kong dollars ($ 637 million), down from Thursday's 7.03 billion Hong Kong dollars ($ 901 million).

Brokers atrributed the slump to profit-taking following recent sharp gains in shares following government intervention to prop up the market.There were also rumors that the government had sold some stocks, pocketing some profits in preparationfor another battle with speculators next week when the August index futures contract expires.

Brokers said market sentiment was also damped by an overnight decline on Wall Street, where the Dow Jones Industrial Average fell 81 points to 8,611.European shares plummet amid global equities instability.

European share prices took a nosedive early on Friday, in the wake of sharp losses on Wall Street and on Asian markets overnight and as Russia's economic turmoil intensified, analysts said. In London, the FT-SE 100 index of leading shares fell by 66.6 points to 5,600.8 points. In Frankfurt, the DAX 30 index opened 32.69 points lower at 5,454.07 points and in Paris, the CAC 40 index opened 50.31 points lower at 4,037.18 points.

Traders said that the markets followed Wall Street lower. US investors engaged in profit-taking amid concern about the outlook for Russian banks, after Russian officials said that many banks would be unable to honour external debt payments. "A large number of commercial banks, but notall, will be unable to meet their foreign obligations," a Russian central bank official said.

Russian bank debt to foreigners, mostly foreign banks, rose to $ 19.2 billion as of July 1, including $ 16.4 billion that matures within one year, the official said.

Russian stocks plunged by more than four per cent in early trade on Friday, as parliament and government locked horns over Russia's financial crisis.And the embattled ruble lost further ground following its de facto devaluation on Monday. Asia compounded the bleak stocks scenario. The Hong Kong market fell by 2.8 per cent on Friday and Japanese share prices closed 0.6 per cent lower after Japan's third biggest business failure this year.