``He's going to look kind of silly,'' said a political analyst Keith Henry with consulting firm Asia Strategy.

``He's not going to be able to go as head of the nation and say, `This is what we've decided,''' Henry added. ``In the Japanese political context, a deal is not necessarily a deal.''

Obuchi was keen to get a pact before meeting Clinton in a New York suburb on Tuesday, when he is expected to be grilled about his plans to clean up Japan's banking sector.

On Friday, opposition and ruling Liberal Democratic Party leaders said they had basically agreed to a plan that would nationalise troubled Long-Term Credit Bank of Japan Ltd (LTCB), strip the finance ministry of its financial policy-making powers and abolish an existing 13 trillion yen ($97.7 billion) fund set up torecapitalise banks while studying some alternate scheme to replace that fund.

By Monday, the only thing clear was that not much --including whether LTCB might still get an infusion of public money from the fund -- was clear at all.

``It looks as though it's going to be rather embarrassing (for Obuchi),'' said head of research Jason James at HSBC Securities Japan. ``On Friday, a political agreement was announced on the banking issue, but that agreement appears to have largely unravelled over the course of the weekend.''

Top government spokesman Hiromu Nonaka told a news conference on Monday that the two sides had agreed not to use the 13 trillion yen fund for LTCB and to create a new scheme for dealing with troubled banks that had not yet collapsed.

But he also said the existing fund was available to handle any crisis that emerged prior to the new scheme's creation.

At the crux of the dispute over LTCB was one small Chinese character inserted in the agreement at LDP insistence.

By placing thecharacter meaning ``etcetera'' after a phrase saying the LTCB would be dealt with by putting it under special state control, the LDP left a huge loophole in the deal.

``This technique is not so rare in the Japanese political and bureaucratic milieu when decisions become very difficult,'' said political science professor Kuniko Inoguchi at Sophia University. ``They always leave room for reinterpretation.''

``But it's too bad that the Obuchi administration is using such parochial language of politicians and bureaucrats,'' Inoguchi said, adding that not only the United States but Japanese citizens would be ``unimpressed'' by the move.

Also still in doubt is the touchy question of how soon and to what extent the finance ministry would be stripped of its policy-making powers, while differences exist over whether priority should be placed on keeping big banks from failing or on winding them up when they do collapse.

Some MPs from the Democrats, the Buddhist-backed New Peace Party and the LDP, however,stressed on Monday that despite the gaps, the basic accord was still intact.

Senior ruling party member Okiharu Yasuoka, meanwhile, told reporters that the two sides could overcome their differences. ``If not, we cannot stabilise Japan's financial sector and we will continue our talks wholeheartedly,'' Yasuoka said. Japanese stock market players, however, were jolted by the political shenanigans.

The Tokyo stock market's main barometer, the 225-share Nikkei average slumped 2.76 per cent to close at 13,597.30 -- its lowest level in more than a dozen years.