The monster 8.9-magnitude quake unleashed a tsunami that claimed hundreds of lives, with local news reports putting the expected toll at well over 1,000.

Major Japanese manufacturers including Toyota, Nissan and Sony were forced to suspend production at some sites, raising short term concerns for the nation's economic growth.

While it is too early for analysts to fully assess the impact of the quake, damage is widespread with plants and factories damaged and facilities such as the Cosmo Oil Co. refinery in Ichihara, Chiba Prefecture burning.

"The greater the social and economic damage, the larger the threat to the government's ability and willingness to ward off a fiscal crisis," consultancy Capital Economics said in a research note.

Soon after the earthquake hit, the central bank quickly announced that it has set up a disaster management team, headed by Bank of Japan governor Masaaki Shirakawa, at its head office in Tokyo.

The BoJ moved to ease any market worries by announcing that it was standing by to supply adequate liquidity to the money markets.

"The bank will continue to do its utmost, including the provision of liquidity, to ensure the stability in financial markets and to secure the smooth settlement of funds, in the coming week."

The BoJ also announced that the two-day policy board meeting previously scheduled for Monday and Tuesday would now be cut short to one day and conclude on Monday, seen as a sign it may quickly implement fresh measures.

However, analysts said the central bank was constrained in what it could do after it reduced its key rate to between zero and 0.1 percent last year.

"There are two basic economics-related concerns," noted Richard Jerram at Macquarie Bank.

"The first is that the fragile economic cycle is not in a position to withstand significant disruption. The second is that the combination of a softer economy and the additional strain on public finances will put upward pressure on bond yields."

In January, Standard & Poor's cut Japan's credit rating for the first time since 2002, accusing the government of lacking a "coherent" strategy to begin easing the industrialised world's biggest debt at around 200 percent of GDP.

Last month rival agency Moody's maintained the pressure as it lowered its outlook on Japan's sovereign debt to "negative".

Before the quake hit the government was seen to be in a precarious position as it struggled to push funding bills for its $1.1 trillion budget for the fiscal year beginning April 1, pointing to a possible government shutdown in the summer.

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