The Nikkei stock average on the Tokyo Stock Exchange dropped 361.29 points to close at 15,649.95, in the first day's trading since the 16.6 trillion yen (US$ 128 billion) package was unveiled. The spending plan will focus on public works and a two-year four-trillion-yen income tax cut, but dealers said they were disappointed the tax cuts were not made permanent.

The Topix index of all first section issues was down 25.13 points to end at 1,213.82 on volume of an estimated 320 million shares, down from Friday's 383.9 million shares.

Share prices stayed in negative territory throughout the day, hit by futures-linked selling and profit-taking in the wake of Friday's stimulus package announcement,brokers said. "Everybody understands that the package will surely have a positive impact on the economy, but they are also well aware of the fact that it will take some time before the package will start having a tangible impact on the economy," the broker said.

The yen's renewed weakness against the dollar also fuelled the downturn in shares, with further pressure from foreign selling, brokers said. "The yen's weakness well illustrates foreign investor pessimism about Japanese assets, equities in particular," the broker said.

A report that Toyota will suffer a drop in earnings in the year to March 1999 reinforced concerns over prospects of broader profit trends in the period, brokers said. "If Toyota is to suffer, others will suffer (from earnings drop) as well," the broker said.

Brokers said some buying from public sector funds had emerged in late trading, supporting stocks at their lows. "As public sector funds are expected to continue to step into the market, the 15,500 points on the Nikkei-225 islikely to remain a solid downside support for the time being," the broker said.

Malaysia's key stock index ends 2.3 per cent lower Malaysian shares ended 2.3 per cent lower on Monday after the resumption of trading in shares of finance company Rashid Hussain Bhd and falls in other index linked counters. "RHB's takeover of Sime Bank is not so favourable to investors. The fall is also due to declines in index-linked counters," an institutional dealer with a local brokerage said.

The Kuala Lumpur Stock Exchange's 100-share weighted composite index fell 14.32 points to end at 620.79 while the lesser second board slipped 2.38 points, or 1.7 percent to 135.23. Stock turnover rose to 112.36 million shares valued at 215.83 million ringgit (US$ 56.8 million) from 105.713 million shares worth 199.354 million ringgit on Friday. Falls outnumbered gains 505 to 123, with 139 unchanged and 167 untraded.

A senior dealer at a bank-linked brokerage said most investors kept away from the market ahead of the Islamic NewYear holiday on Tuesday. "Nobody wants to take up any fresh positions ... there is just selling," he added.

One local analyst said losses were also largely due to weaknesses in the regional bourses. Seoul shares fall 1.3 per cent with no fresh leadsShare prices fell 1.3 per cent on the Korea Stock Exchane on Monday on lack of fresh leads with futures-linked selling pushing the index down further, dealers said. "There might be some bargain-hunting after a slide but as foreign investors are sceptical about the implementation of restructuring, any trade should be on short-covering," an LG Securities dealer said. The declining yen weakened sentiment, he said.

The composite index closed down 5.38 points at 406.25, off a low of 406.06. The benchmark corporate bond yield was unchanged at 18.4 per cent. Volume was 44.6 million shares worth 247.8 billion won (US$ 180 million). Decliners led advancers 628 to 184, with 61 shares unchanged. The undervalued banking sector attracted fresh interest after a sharpdownturn.