Tokyo - Japanese Prime Minister Taro Aso on Monday ordered the government and the ruling parties to immediately implement measures to stabilize the stock market.

"Stock prices greatly influence the real economy," Aso said at a press conference. "In that sense, we have to consider various measures and implement them."

The government was expected to implement emergency measures such as a larger government fund to recapitalize ailing banks and help for employees to purchase stock in their companies, Aso said.

The premier made the announcement after Japan's benchmark Nikkei Average hit a 26-year low, falling more than 3 per cent and dropping below 7,500. The Nikkei has lost half its value this year.

While Finance Minister Shoichi Nakagawa said he was "very much worried" about the fall in stock prices, he stressed the importance of "rebuilding confidence between the government and market participants."

As an emergency measure, the government might endorse stricter rules on stock short-selling by early November and was planning to boost bank recapitalization, Nakagawa said. (dpa)