Japan approves new stimulus spending for ailing economy

TOKYO (AP) - Japan's Cabinet has approved a 422.6 billion yen (S$6.4 billion) economic stimulus package, hoping to fend off recession amid mounting signs of a faltering recovery in the world's third biggest economy.

The emergency spending package passed on Friday is meant also to help make up for lost momentum from reconstruction in the region devastated by the March 2011 earthquake and tsunami.

Prime Minister Yoshihiko Noda's leeway to boost spending is limited by a legislative standoff preventing issuance of deficit-covering bonds. Mr Noda has ordered the government to draft further measures to boost growth.

The decision coincided with news of a 0.1 per cent fall in the consumer price index in September, adding to pressure on the central bank to ease policies to help fight deflation, or falling prices, which can hinder economic growth.