Major steel plant ablaze, electronics giant Sony Corp closes six factories - news agency
Some Japanese nuclear power plants and oil refineries were shut down on Friday and a major steel plant was ablaze after a powerful earthquake rocked the country, triggering tsunami, buckling roads, and knocking out power to homes and businesses.
Electronics giant Sony Corp, one of the country's biggest exporters, shut six factories, Kyodo news agency reported, as air force jets raced towards the northeast coast to determine the extent of the damage from the 8.9 magnitude quake.
The Bank of Japan, which has been struggling to boost the anaemic economy, said it would do its utmost to ensure financial market stability as the yen and Japanese shares fell.
"There are car and semiconductor factories in northern Japan, so there will be some economic impact due to damage to factories," said Yasuo Yamamoto, senior economist at Mizuho Research Institute in Tokyo.
Japanese media reported at least five deaths and many injuries, with fires breaking out from Sendai city in northern Japan to Tokyo. A tsunami 10 metres high hit Sendai port but there were no immediate reports of damage.
The Miyagi prefecture and surrounding areas include major manufacturing and industrial zones, with many chemical, petrochemical and electronics plants.
Television showed black smoke pouring out of an industrial area in Yokohama's Isogo area. Two people were reported killed by a collapsing ceiling at a Honda factory in Tochigi Prefecture but no other details were immediately available.
Several airports, including Tokyo's Narita, were closed and rail services were halted.
The yen extended earlier losses to stand 0.3 percent lower against the dollar by 0800 GMT, while Nikkei stock futures fell more than 3 percent.
"Stocks will probably fall on Monday, especially of those companies, that have factories in the affected areas, but on the whole the sell-off will likely be short-lived," said Mitsuhsige Akino, a fund manager at IchiyoshiInvestment Management.
Bond futures surged on worries the widespread damage would put further pressure on the already sputtering economy, while the most active gold contract on the Tokyo Commodity Exchange, February 2012, inched higher.
"We still don't know the full scale of the damage, but considering what happened after the earthquake in Kobe, this will certainly lead the government to compile an emergency budget. We can expect consumption to fall. This could temporarily pull down gross domestic product," Yamamoto said.
Hokuriku Electric Co said on Friday all of three reactors at its Onagawa nuclear plant in northern Japan shut down automatically after the quake, but no nuclear leaks were reported.
JX Nippon Oil & Energy Corp, Japan's top refiner, halted operations at three refineries in Sendai, Kashima and Negishi, Jiji News said.
Electric Power Development (J-Power) also halted operations of its Isogo thermal power plant in Yokohama, Jiji reported.
Television reported a major fire at Cosmo Oil Co's Chiba refinery, east of Tokyo.
A fire was also reported at JFE Holdings Inc's steel plant in Chiba. JFE is the world's fifth-largest steelmaker.
After shrinking slightly in the final quarter of last year Japan's economy had been widely expected to resume growth early in 2011 as exports and industrial production picked up, but the quake raised the prospect of major disruptions for many key businesses at least in the short term.
"The government would have to sell more bonds, but this is an emergency, so this can't be avoided," Yamamoto said.
"Given where the Bank of Japan's benchmark interest rate is now, they can't really lower rates. The BOJ will focus on providing liquidity, possibly by expanding market operations."