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English/Nat The Tokyo stock market dropped a further 2.23 percent Friday, down more than 340 points. The Yen also fell sharply in Friday trading, hovering around the 126 level, far lower than central bankers had previously desired. Analysts say Japan's stagnant economy is heading toward depression. The wariness over the Japanese financial system rekindled dollar-buying activity, sending it to the 126 yen level in Tokyo Friday. A strong dollar and weaker stocks signal low expectations for a package of proposals from the ruling Liberal Democratic Party designed to jump start Japan's sagging economic growth rates. The U-S dollar was trading at 125.70 yen on the Tokyo foreign exchange market at 3 p.m. (0600 GMT) Friday, up 0.30 yen from late Thursday. The Japanese Finance Ministry says the economy is stalling and U-S Federal Reserve Board Chairman Alan Greenspan is also expressing anxiety over the Japanese financial system. SOUNDBITE:(English) \"Obviously, there is an overwhelming bias towards the yen's depreciation in the market. When economy is this weak and financial risk is increasing, there is obviously desire by many investors to sell in Japan. There are even overseas investors who think the yen should go 130, 140, 150, who believe that the best way for Japan is to depreciate very rapidly and rather sharply and let the economy have breathing space and an export led kind of recovery.\" SUPER CAPTION: Mineko Sasaki-Smith, Chief Economist, CS First Boston The Japanese government has yet to offer a real solution to kick start the economy. And Japanese television network TBS revealed Thursday evening that the banking industry's bad debt on property is three times more severe than the banks are saying. SOUNDBITE: (English) \"I am of a view that we are in a financial depression yes and why it hasn't manifested in a genuine overall malaise in a depression. Average people's lives still appear to be superficially better than the 1930's. People are not jumping out of the window all over the place or people are not in the same kind of poverty, but that it because in the Japanese system we have underemployment where excess workers are kept on the payroll.\" SUPER CAPTION: Mineko Sasaki-Smith, Chief Economist, CS first Boston The stock market continues to be battered by overseas investors, pulling their funds out of the Japanese market due to a lack of confidence in the Japanese government's ability to introduce economic reforms. The Nikkei Stock Average of 225 issues closed at 15,082.52 points on the Tokyo Stock Exchange Friday, down 344.75 points, or 2.23 percent from Thursday. The current concern is that the benchmark average would dip to the 14,000 level in the near term, but the 15,000 mark seemed the resistance line for now. You can license this story through AP Archive: http://www.aparchive.com/metadata/youtube/f53a9c0f8585ff5b44334a13cb80567a Find out more about AP Archive: http://www.aparchive.com/HowWeWork