	 war fears may prompt stock markets downturn the threatened  war between the united states and japan is just the kind of shock that economists say could send world stock markets into a tailspin but they are not so sure if that would be a brief corrective dip or whether this week s falling share prices mark the start of a bear market it s the billion dollar question said richard o brien economist at american express international bank in london japan s  surplus billion dlrs last year has poured into share and bond markets around the world and funded a good chunk of the huge u s budget deficit around a third of any new sale of u s treasury bonds has been bought by the japanese however japanese investors have lost money as the dollar falls and will lose more if the united states lets it fall further to cut the  deficit the counterpart of improving the  deficit either through a lower dollar or because the u s increases duties on japanese electronic goods may be to hit the capital inflow which has financed the budget deficit and if the u s  deficit does fall the japanese will have less money to invest to entice u s investors to fill the gap that would be left if the japanese stopped buying u s bonds interest rates would have to soar o brien said the subsequent shift from shares to bonds could cause major falls on the world stock markets a year ago we could be pretty confident about the markets said o brien now it is much less certain buoyant share prices are supposed to reflect a booming economy but the world economy with sluggish growth at best in the industrial nations a massive load of third world debt and huge  imbalances is not in good shape said o brien nevertheless new york analyst william raferty of smith barney harris upham said we re still in a bull market adding that corrections are a normal part of a rising market and the bear usually strikes slowly economist evelyn brody at morgan grenfell and co in london said the huge sums of money going through the world financial system will keep a floor under share and bond prices although interest by the japanese in putting their money in non dollar denominated bonds and stocks has increased it s very difficult to see where else they can put their money than in u s dollars and especially the u s treasury bond market according to david butcher a senior executive at yamaichi securities co ltd s bond operation in london he said the japanese are paying much closer attention now to the french franc and west german mark in the longer run he worries about what  tensions and the dollar s slide will mean for securities markets reuter 
