Japan government may buy stocks from market-Nikkei

NEW YORK Feb 24 (Reuters) - The Japanese government and ruling coalition are considering a plan to use taxpayer funds to buy stocks and other assets directly from the market to help prop up prices, the Nikkei financial daily reported.

The report reflects growing concern that falling stock prices will lead to more losses among banks and other companies and put further stress on Japan's weak economy.

Tokyo's stock market is down about 18 percent this year.

Under the proposal, the range of assets that could be bought under an existing program also would be expanded to include exchange-traded funds, the Nikkei said.

The purchases would be made through the Banks' Shareholding Purchase Corp, set up to help to revive the Japan's weakened banking sector, which was burdened by bad loans after a decade-long 1990s recession and the bursting of the tech bubble in 2002.

Legislation that would allow the agency to resume stock purchases and tap a total of 20 trillion yen ($207 billion) in government guarantees has already been submitted to parliament.

The agency would finance purchases by procuring funds from commercial banks and other institutions, with the government guaranteeing principal and interest payments, the Nikkei said in its report, which did not cite sources.

Another proposal under consideration is the joint launch of a new stock-buying organization by the government and the private sector, the Nikkei said.

($1=96.7 yen) (Reporting by Ted Kerr; Editing by Steve Orlofsky)