The announcement that the Japanese, US, eurozone, Canadian and British monetary authorities would take concerted action immediately pushed down the yen as intended and helped to lift battered Tokyo shares.

The pledge came after emergency telephone talks by the Group of Seven nations in response to a surge in the yen, which threatened the Japanese economy's recovery prospects following the March 11 quake and tsunami.

"We express our solidarity with the Japanese people in these difficult times, our readiness to provide any needed cooperation and our confidence in the resilience of the Japanese economy and financial sector," a G7 statement said.

"As we have long stated, excess volatility and disorderly movements in exchange rates have adverse implications for economic and financial stability. We will monitor exchange markets closely and will cooperate as appropriate."

The G7 groups Britain, Canada, France, Germany, Italy, Japan and the United States.

Dealers said Japan appeared to have intervened soon after the G7 announcement, selling around 2 trillion yen. The unit had strengthened sharply despite fears of a major hit to the Japanese economy from the natural disasters and resulting atomic crisis.

The dollar rose sharply against the yen Friday in the wake of the G7 pledge, rebounding back above the 81 level. It fetched 81.76 yen at 0740 GMT.

On Thursday the dollar had tumbled below 77 yen, hitting its lowest level against the Japanese currency since World War II, a move Tokyo blamed on speculators betting on an influx of capital to aid reconstruction efforts.

"Although we expect further forex intervention over coming days, upward pressure on the currency will remain in place, suggesting a battle in prospect for the authorities to weaken the currency going forward," said Credit Agricole analyst Mitul Kotecha.

"Round one has gone to the Japanese finance ministry and G7, but there is still a long way to go, with prospects of huge repatriation flows likely to make the task of weakening the yen a difficult one."

A stronger currency is bad news for Japanese exporters already battered by the quake-tsunami disaster, which has left almost 17,000 people dead or missing and inflicted widespread damage to homes and infrastructure.

"We believe it is extremely important that G7 countries unite and cooperate towards stabilising the markets when our country is in a difficult state," Japan's Finance Minister Yoshihiko Noda told reporters.

The Bank of Japan injected another four trillion yen ($49 billion) of emergency funds into the short-term money markets Friday -- the latest in a series of injections to prevent financial institutions running out of cash.

Tokyo shares surged as investors welcomed the G7 announcement. The benchmark Nikkei index closed up 2.72 percent.

Shares of TEPCO, which operates the troubled Fukushima Number One nuclear power plant, closed up 19 percent, limit-up, at 948 yen having lost more than 62 percent over the past five sessions through Thursday.

The Nikkei index suffered the biggest two-day sell-off for 24 years on Monday and Tuesday, plunging 16 percent.

Markets have been on edge all week as Japanese authorities battle to regain control of a stricken nuclear power plant that has suffered a series of blasts after the 9.0-magnitude quake and tsunami.

Officials have been trying to douse radioactive fuel rods using helicopters and water cannon while also racing to reconnect electricity to restart the plant's cooling systems in a desperate bid to prevent more radiation leaking.

Japan relies on its nuclear plants to provide around 30 percent of its energy needs, and shutdowns in the wake of the massive earthquake have led to rolling outages that have forced companies to suspend production lines.

Damage from the earthquake could potentially amount to tens of trillions of yen (hundreds of billions of dollars) and could lead to months of disruption to Japan's factory production due to supply problems and power cuts, analysts say.

earlier related report
China February home prices show signs of softening
Shanghai (AFP) March 18, 2011 - China's efforts to cool its red-hot real estate market showed signs of working in February, as government data Friday showed more cities seeing a fall in house prices from the previous month.

The figures could mean Beijing will hold off any further measures to rein in prices in the near term, analysts said, after a series of measures over recent months.

The cost of a newly built home in eight of the 70 major cities tracked fell in February from January, the National Bureau of Statistics said. Just three cities had shown a decline in January.

While prices in 68 cities rose last month from February 2010, analysts said the month-on-month data showed official measures to rein in soaring house prices were kicking in.

"The administrative measures are taking effect. With restrictions on purchases of homes in full play, transactions are likely to remain very weak in coming months," said Huang Yumei, an analyst at Debon Securities.

The government has implemented a number of measures to restrain the market including bans on purchases of second homes in some cities and a property tax trial in Shanghai and the southwestern mega-city of Chongqing.

Fifty-six cities saw prices rise in February from the previous month, compared with 60 cities in January, according to the statement.

Prices in Beijing rose 0.4 percent in February from January, slower than the 0.8 percent month-on-month increase in January. Shanghai recorded a 0.9 percent increase for the second straight month.

Huang said the apparently softening property data meant no further tightening steps were likely in the near-term.

"Now the focus of the government is to accelerate construction of affordable housing, which will give it more leeway in controlling the property market without causing a collapse," he said.

Premier Wen Jiabao promised in an address to the nation's legislature this month that the government would ramp up a campaign to construct affordable housing amid growing public concern over rising prices.

China this year scrapped a nationwide property index and instead now publishes price changes for individual cities.

The earlier method, which gave an average of prices nationwide, had been criticised for understating the severity of the country's property price surge by diluting large spikes in big cities with tamer changes in smaller ones.

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