The Bank of Japan is ready to step in and stabilise the country's financial markets with an injection of up to Y3 trillion (£22.8bn) into the banking system today, as a senior government official admitted the economic impact of the disaster could be "considerable".

Central bank governor Masaaki Shirakawa said after a cabinet meeting yesterday: "We will monitor market conditions and plan to provide markets with a lot of liquidity first thing tomorrow morning." Over the weekend it extended Y55bn to banks in areas hit by the earthquake.