With the scale of the disaster in Japan still being measured, concerns are growing that last week's earthquake and tsunami could lead to a long-term disruption in the world's supply of automobiles, consumer electronics and machine tools, the Los Angeles Times reported. Japan is the world's third-largest economy and a huge exporter of cars, electronic components and industrial equipment as well as steel, textiles and processed foods. In turn, it's a voracious consumer of petroleum, imported agricultural products and luxury consumer goods.

On Sunday night, Japan's Prime Minister Naoto Kan was urging the public not to be pessimistic because Japan will enjoy "a New Deal-like" economic recovery on the back of the massive reconstruction task ahead. Any dividend from reconstruction and reform looked distant on Monday, however. Japanese stocks fell 7.6 percent, on track for the biggest daily loss since October 2008, and bond yields rose as investors expected the disaster to take a huge economic toll and require heavy government borrowing, according to a Reuters Special Report.

U.S. private-equity fund TPG Capital and Japanese consumer lender J-Trust are the likely contenders to take over failed consumer lender Takefuji, in a decision to be announced as early as the end of this month, according to sources familiar with the situation, The Wall Street Journal reported. TPG Capital, Cerberus Capital Management, J Trust, Tokyo Star Bank and Korea's A&P Financial are the five finalists for the final round of bidding, the people said.

The struggling Japan Airlines Corp will get capital of 10-20 billion yen ($122.1-$244.1 million) from eight firms, including Daiwa Securities Group Inc and Tokio Marine & Nichido Fire Insurance Co, Reuters reported on a Nikkei business daily story. The carrier, hoping to complete its court-led rehabilitation by the end of March and relist by the end of 2012, is also turning to 12 banks for 280 billion yen in loans, Nikkei said.

Bank of Japan Governor Masaaki Shirakawa said the Japanese economy is likely to emerge soon from its recent lull, but he warned of the long-term risks of the nation's deteriorating fiscal health, The Wall Street Journal reported. Mr. Shirakawa said the International Monetary Fund forecast Japan's economy will grow by 4.3% in 2010—the highest rate of growth among the Group of Seven leading industrial countries.

A Japanese bank agreed to sell $100 million of loans related to Dubai World before completion of the state-owned entity's debt restructuring plan, Reuters reported on a story from The National. The bank, which the paper did not name, began selling its loans last summer before Dubai World reached an agreement with its creditors in September, The National reported, citing sources that it did not identify. A sale agreement reached last week would provide the Japanese bank with between 60 cents and 65 cents on the dollar.

Standard & Poor's cut Japan's credit rating on Thursday for the first time since 2002, saying Tokyo lacked a plan to deal with its mounting debt, in a warning that will rattle other heavily indebted rich nations, Reuters reported. The agency reduced Japan's long-term sovereign debt rating by one notch to AA minus, three levels below the highest possible rating. It said Japan's fast-aging population, persistent deflation and the loss of the coalition's upper house majority had compounded the government's fiscal challenge.

Japanese private-equity fund Advantage Partners LLP is in talks with creditors about giving up board seats at Tokyo Star Bank Ltd. and control over the eventual sale of the lender, a person familiar with the matter said, Dow Jones Daily Bankruptcy Review reported. Dallas-based investor Lone Star Funds and other lenders are discussing with Advantage Partners restructuring the roughly Y160 billion in loans, worth $1.9 billion at current exchange rates, that the Japanese fund took out to buy Tokyo Star, according to people familiar with the matter.

One year after its spectacular bankruptcy filing, Japan Airlines on Wednesday faced a lawsuit from 146 former pilots and cabin attendants calling for their jobs back after being made redundant, Agence France-Presse reported. The case, filed with the Tokyo District Court, claims JAL management did not do enough to avoid the layoffs. The company's court-approved rehabilitation plan calls for cutting about 16,000 jobs.

Prime Minister Naoto Kan said Japan is in a “crisis” comparable to the bankruptcy that Japan Airlines Corp. faced a year ago, Bloomberg reported. Kan spoke after meeting with JAL chairman Kazuo Inamori, whose airline filed for bankruptcy protection on Jan. 19, 2010. The carrier is shrinking overseas routes and cutting aircraft, having eliminated about 14,500 jobs to lower costs. Japan Air had a third-quarter operating profit of 110 billion yen ($1.3 billion), compared with a 96 billion yen loss a year earlier.