She weighs a mere 52kg and stands a little over five feet tall, but Eri Yoshida is to about to become the first woman to play in Japan's all-male professional baseball league.

The 16-year-old high school pupil from Yokohama pitched her way through the sport's glass ceiling this week when she was chosen to play for the minor league team Kobe 9 Cruise.

Though she has a long way to go before making it into the top flight, Yoshida has quickly become a role model for thousands of other Japanese women who, until now, were confined to playing for company teams or in amateur softball leagues.

"I never dreamed of getting drafted," she told reporters the day after she was drafted along with 32 male players. "I have only just been picked by the team and haven't achieved anything yet."

Despite her diminutive stature, Yoshida bamboozled a string of male batters during trials with her trademark knuckle ball - a fiendishly difficult pitch that changes trajectory unexpectedly as it hurtles towards the batter's plate.

She said she was inspired to persevere in the conservative, male-dominated sport after watching videos of the celebrated Boston Red Sox pitcher Tim Wakefield, who made a successful career out of delivering a mean knuckle ball.

"I'm really happy I stuck with baseball," she said. "I want to pitch against men and, eventually, I want to play as a pro in a higher league." Kobe and three other teams will compete in a new league to be launched in western Japan in April.

Japan had a professional baseball league for women in the 1950s, but it folded after two years. The country's professional baseball federation did not lift its ban on female players until 1991 and "little league" teams started accepting girls only 10 years ago.

The pitcher's face, partly hidden by a baseball cap, was splashed across the sports tabloids; the Asahi Shimbun, a serious broadsheet, ran an analysis of her unorthodox sidearm pitching style.

Cynics accused Kobe - roughly equivalent to a lowly farm team in the US Major Leagues - of choosing Yoshida to generate publicity for the fledgling four-team league.

"I think her recruitment is partly about publicity," said Toshihiko Kasuga, director of the Women's Baseball Association of Japan. "It would be extremely hard for women to compete fairly against men in any sport."

Faced with repeated requests from reporters to demonstrate her grip, Yoshida displayed some of the guile that has helped her break through baseball's gender barrier: "It's a secret," she said.

Sunrise is at least an hour away when Atsushi Sasaki steers his fishing boat out of Oma and into the notorious straits separating Japan's mainland from its northernmost island, Hokkaido.

By the time he reaches the open water of the Tsugaru Strait, the wind has turned into a gale and the waves grow higher with every assault on the bow of his boat.

But Sasaki, a wiry 61-year old with a crewcut and the teak complexion of an inveterate fisherman, is unfazed: even the discovery that the coolbox containing his lunch is now flooded with seawater is accepted with a shrug. For now, his concern is directed solely at his prey: the bluefin tuna.

Global stocks of the highly prized fish have plummeted by 90% in the last 30 years, and much of the blame rests with Japan, by far the world's biggest consumer. Every year the Japanese get through about three-quarters of the world's bluefin catch; 80% of tuna caught in the Mediterranean ends up on the Japanese market.

Faced with the imminent collapse of bluefin stocks, fisheries officials from 45 countries are meeting in Morocco this week to discuss bluefin quotas for the Atlantic and Mediterranean next year. Conservationists want a moratorium, but Japan is reportedly about to support a scientific panel's recommendation that the quota be set at 15,000 tonnes, about half the current level.

But while attempts are being made to rescue bluefin tuna populations in seas thousands of miles away, nothing is being done to prevent Japan's appetite for tuna sushi and sashimi from ripping through stocks along its own coastline.

But Sasaki is not part of Japan's overfishing problem. Rather, he could be the solution. There are no trawler nets or lines coiled in heaps on his boat (named, with incidental irony, Man'yu, or Ten Thousand Tuna). He is one of barely 200 ippon-zuri fishermen around Japan, who catch tuna sustainably using a combination of a rod and line, a basic sonar and occasional luck.

The former salaryman, who quit his office job 20 years ago to lead the life of an itinerant fisherman, is a regular visitor to Oma, one of just three places in Japan where the method survives.

In an attempt to prevent the tradition from dying out and to protect local stocks from being fished into oblivion, the local authorities have assigned the Tsugaru Strait for the exclusive use of Oma's 60 rod-and-line fishermen.

The move has met with mixed results. The ippon-zuri have become embroiled in a row with longline fishermen who violate the exclusion zone by using baited lines often several miles long. Elsewhere, trawlers, equipped with sophisticated sonar, plunder coastal waters, aided by the absence of official quotas and collusion between politicians and the powerful fishing lobby.

High fuel prices, lower profit margins and stricter quotas in other parts of the world have created an irresistible urge for Japanese boats to take more bluefin from their own waters. And all the time demand is growing, not only in Japan, the US and Europe, but increasingly in China and Russia.

"Japan's fisheries have no idea how many tuna they are catching or what size they are," says Sasaki, in the smoke-filled cabin of the Man'yu. "The smaller tuna have all been caught, along with the fish they feed on, and unregulated fishing with trawlers is to blame."

Faced with official diffidence and scant popular enthusiasm for conservationism, Sasaki is spurred on by relatively low operating costs and the knowledge that he is playing a small part in a nascent interest among the Japanese in sustainable sushi.

"We need proper stock management," he says. "Collapse is just around the corner."

The bluefin tuna caught off Oma, a town of 6,000 people on the northern coast of Aomori prefecture, are seen as the tastiest in Japan and typically fetch twice as much as imported fish at auction. In 2001, a 202kg (445lbs) Oma bluefin sold for a record ¥20.2m (£141,400).

The yearly average catch for Oma is 2,500 tuna, worth about ¥1.6bn (£11m) to the local economy. This is tiny compared with a few decades ago, says Hirofumi Hamabata, head of the town's fishing cooperative. "After the war, each boat returned with about half a dozen tuna every day," he says. "They were so cheap you'd have to sell 4kg of fish just to be able to afford a pack of cigarettes."

Akihiro Furukawa, a longline fisherman for 13 years, admits he fears for the future: "My son wants to follow in my footsteps, but by the time he's old enough to go to sea, there won't be any fish left to catch."

In the Tsugaru Strait it is usual to see 150 boats fishing for tuna. Today, though, the weather has put most fishermen off. And after several hours at sea on an empty stomach, Sasaki is ready to call it a day. As darkness descends on Oma, another ippon-zuri fisherman who has had better luck returns. Watched by groups of children, six tuna weighing up to 100kg are unloaded and packed into wooden vats of crushed ice, ready be driven to the Tsukiji market in Tokyo before dawn. The fish may well fall under the gaze of Toichiro Iida, a wholesale trader who seeks out Oma tuna at auction. His family firm, Hicho, has been in business for almost 150 years.

He says many of his fellow traders know nothing about the provenance of their tuna."They're just happy to buy the cheaper fish and make easy profits, but to do that they have to buy tuna that has come off a trawler," says Iida, who counts Tokyo's best sushi chefs among his clients. "Even some sushi restaurateurs don't know if their tuna is caught using nets or by more sustainable methods," Iida says. "It is about time they learned."

Backstory

The Japanese eat 600,000 tonnes of tuna a year - about a third of the total fished worldwide, and about three-quarters of the total bluefin fished worldwide. In 2006, Japan mported 44,000 tonnes of bluefin, just over half of it from the east Atlantic and Mediterranean. According to the International Commission for the Conservation of Atlantic Tuna, which meets in Marrakech this week, about 61,000 tonnes of bluefin tuna were caught in these seas last year - more than double the permitted catch of 29,500 tonnes. The commission has set a target of 25,500 tonnes by 2010, but many experts believe this should be nearer 15,000 tonnes. The Blue Ocean Institute's guide says bluefin tuna should be avoided altogether. Some restaurants, such as the Moshi Moshi chain in the UK, have removed bluefin from their menus.
Justin McCurry

The biggest ship in Japan's whaling fleet slipped out of port amid tight security today, as Australia mounted an unprecedented challenge to its claims that its annual culls in the Antarctic constitute vital scientific research.

The Nisshin Maru, which processes harpooned whales, left Innoshima port in western Japan this afternoon, according to Greenpeace. Japanese officials refused to confirm the report, citing security concerns.

It was not clear when the Nisshin Maru would be joined by the rest of the fleet; last year it was accompanied by two spotter boats, three harpoon vessels and a refuelling ship. Unconfirmed reports said the other vessels would leave from a different port later this month.

The fleet plans to take 935 minke whales and 50 fin whales during its Antarctic hunt, but last week bowed to pressure from the US and agreed not to kill humpback whales – an endangered species – for the second year running.

Whaling officials denied a report in the Asahi Shimbun newspaper that the fleet had been forced to reduce its target catch by 20% this year in the face of mounting international opposition and a steep drop in domestic demand for whale meat.

Though the International Whaling Commission banned commercial whaling in 1986, Japan is permitted to catch whales for what it claims is important research into the mammals' migratory and reproductive habits.

Australian government officials said their US$3.9m (£2.6m) non-lethal study, unveiled today, would "assess the scientific credibility" of Japan's programme.

"Modern-day research uses genetic and molecular techniques as well as satellite tags, acoustic methods and aerial surveys rather than grenade-tipped harpoons," the environment minister Peter Garrett, told reporters in Canberra.

"Australia does not believe that we need to kill whales to understand them."

According to witnesses, the Nisshin Maru was seen off only by officials and relatives of the crew. Whaling officials had already decided to cancel a traditional Shinto ceremony to mark the ship's departure.

Conservationists welcomed the low-key send-off as an important step in its campaign to end the scientific hunts.

"Constant pressure on Japan's whaling industry by both Greenpeace and the international community has reduced the fleet to sneaking out of port in a fog of crisis and scandal, desperate to avoid attention," said Sara Holden, a Greenpeace spokeswoman.

Japan's whalers returned from their most recent hunt with just over half their intended catch of 1,000 whales after being pursued across the southern ocean by anti-whaling activists.

Greenpeace recently decided not to harass the fleet this year, saying it preferred to focus on forging a stronger anti-whaling lobby in Japan.

"Research whaling has hardly produced any internationally credible results, and is virtually serving no benefit to [Japanese] taxpayers," it said in a statement. "Research whaling should be stopped immediately."

Japan today felt the full force of the global slowdown as its economy slid into recession for the first time in seven years amid weak exports and falling corporate investment.

The world's second-biggest economy contracted 0.1% in the July-September quarter, the government said today. The figures were worse than expected; economists had predicted Japan would narrowly avert recession with growth of 0.1%.

Despite that, the Nikkei gained 0.7%, or 60 points, to close at 8522. Earlier in the day the index gained almost 3% after a slightly weaker yen lifted exporters. The dollar later slipped against the yen, wiping out most of the day's gains.

Two consecutive quarters of contraction - the technical definition of recession - means Japan joins the eurozone countries on the list of major economies in recession, with the US expected to confirm soon that it has met the same fate.

Today's figures mark the first time that Japan has suffered two consecutive quarters of contraction since 2001.

According to government figures, gross domestic product [GDP] contracted at an annualised rate of 0.4%, highlighting its export-led economy's vulnerability to slowdowns in the US and Europe.

Officials warned that a killer combination of slow exports and weak business investment at home meant it could be some time before Japan climbs out of its slump.

"The downtrend in the economy will continue for the time being as global growth slows," said the economy minister, Kaoru Yosano.

"We need to bear in mind that economic conditions could worsen further as the US and European financial crisis deepens, concerns over economic downturn heighten and foreign exchange markets make big swings."

The latest figures come only months after Japan's leaders were praising their economy's fortitude in the face of financial meltdown in the rest of the developed world.

Now, however, Japan can no longer claim immunity. The Nikkei stock average has fallen by 25% since the start of October and the yen's rapid appreciation against the dollar has battered earnings among the country's major exporters.

Toyota, for example, cut its full-year profit forecast by almost 70%. Other car and electronics makers have issued similarly dismal forecasts.

Fears are rising that the Japanese economy will contract again in the third and fourth quarters. The spectre of deflation has also returned as personal consumption, which accounts for 55% of Japan's GDP, threatens to dip following a 0.3% rise last quarter.

Economists put that tiny jump down to the long hot summer and demand for wide-screen TVs ahead of the Beijing Olympics. But consumers are expected to dramatically rein in spending as the full extent of the global crisis becomes apparent on this side of the Pacific.

Given that the latest figures did not factor in the crisis's full impact on Japan, the slump is expected to continue into next year, when the benefits of government stimulus packages finally kick in.

Yosano admitted that Japanese firms were "taking a step back" in terms of capital spending. He added: "As for external demand, we can't expect much from the US, Chinese, European and south-east Asian economies."

Business investment - along with exports the driving force behind Japan's recovery from 2002 - fell 1.7% in the three months from July, the biggest drop in more than a year and its third straight quarterly decline.

The Bank of Japan, which last month cut its key interest rate from 0.5% to 0.3%, could come under renewed pressure to take rates back to zero, although analysts see little point in doing so now.

"It's too late for monetary policy to revamp the economy," said Kyohei Morita, chief economist at Barclays Capital Japan. "The economy needs to depend on fiscal policy."

Though the bursting of the stock and property bubble almost 20 years ago marked its dramatic opening, the growth-sapping villain of the piece in Japan's "lost decade" was far more insipid: deflation.

For about eight years from the late 1990s, Japan was trapped in a deflationary spiral. For consumers the logic was simple: why buy today something you can pick up cheaper tomorrow?

Japan clawed its way out of its recurring cycle of recession, but stagflation persists, consumer spending remains weak, and the trauma of near meltdown is still fresh in the national psyche.

Not every one suffered, though: deflation ushered in an era of cheap malt-based alcohol, compact cars and 100-yen shops. Retirees found the real value of their savings rise although they sat in accounts with ultra-low interest rates. The Bank of Japan's governor at the time, Masaru Hayami, talked enthusiastically about "good deflation" spurred by competition to provide goods and services on the cheap. But for most Japanese, eight years of deflationary ensnarement was anything but good.

Workers accustomed to pay rises and twice-yearly bonuses worried about the size of their wage packets, and whether they would soon have jobs to go to at all. Consumers squirreled away cash for fear of what the future had in store. By the late 1990s they were trapped, and they would remain so until the then finance minister, Koji Omi, declared deflation at an end in October 2006.

Perhaps the most worrying aspect of Japan's deflationary era was that it continued even after interest rates dropped to near zero in 2001 as the Bank of Japan flooded banks with excess liquidity.

By the turn of the millennium, what had recently been a nation of investors and copious consumers was now one of spendthrifts. Among the most visible victims were the nation's taxi drivers.

"The number of taxis increased dramatically, but the number of customers was falling," says Katsumi Sugihara, a taxi driver in the Tokyo suburbs.

She says the warning signs have returned. "Companies have stopped handing out books of taxi tickets to their employees because they're cutting down on corporate entertainment. That means we have to rely on private fares, and one of the first luxuries people dispense with in hard times is a taxi ride home from work."

Yesterday the OECD forecast deflation would return to Japan next year. Wholesale inflation dropped to 4.8% in October from 6.8% a month earlier, through a combination of a strong yen, falling commodity prices and lower shipping costs. The economy shrank at its fastest pace in seven years in the three months to June, and the figures for the latest quarter, due on Monday, are expected to show only minuscule growth - an ominous sign for domestic consumption, which accounts for 90% of Japan's GDP.

A Japanese politician today risked angering millions of Tokyo residents after he said a powerful earthquake in the capital would boost the economy of the country's western region.

Toshizo Ido, the governor of Hyogo prefecture, told a meeting of local leaders that businesses opportunities would flood into the region in the aftermath of a disaster in Tokyo.

"If there were a big earthquake in Kanto [eastern Japan], it would sustain considerable damage. This would be a chance for us. We must exploit the opportunity and make preparations."

Ido's comments are unlikely to be well received in his own prefecture, where more than 6,400 people died after an earthquake measuring magnitude 7.3 struck the port city of Kobe in January 1995.

The quake, Japan's worst for half a century, caused an estimated $100bn (£66bn) in damage and destroyed more than 100,000 buildings.

His remarks were swiftly condemned in Tokyo. "Hyogo suffered greatly from the Hanshin quake so he should know the pain very well," the chief cabinet secretary, Takei Kawamura, told reporters.

Seismologists believe there is a 30% chance that a major earthquake will strike Tokyo by around 2015 and a 70% chance within the next 30 years.

In 1923 a 7.9 magnitude earthquake hit Tokyo and surrounding areas, killing more than 140,000 people and destroying more than half a million homes.
Government experts estimate that a magnitude 7.3 earthquake centred on Tokyo Bay could kill tens of thousands of people and leave 7 million homeless, while economic damage could total more than $1tn.

Ido said the Kinki region, which comprises Hyogo, Osaka and two other prefectures, should prepare to function as a "second capital" in case of economic and political paralysis in Tokyo.

"We should think about how we can change the current arrangements, under which everything is concentrated in Tokyo," he said. "We should show the flag."

Other leaders attending the meeting in the western city of Wakayama appeared mildly embarrassed by Ido's outburst.

Toru Hashimoto, the governor of Osaka, described the remarks as "inappropriate" but said he believed Ido had been trying to stress the need to support Tokyo in the event of a major disaster.

Ido later admitted he should have chosen his words more carefully. "If the word 'chance' invited misunderstanding, then I should have used a more appropriate one," he told a news conference. "I didn't mean to say anything I would have to apologise for."

Seismic tremors shake the Japanese archipelago about 100,000 times a year, according to experts, but most are so weak that they are picked up only by sensitive instruments.

Japan accounts for a fifth of all earthquakes around the world measuring magnitude 6 or higher.

A Japanese woman who was allegedly abducted by North Korean agents more than 30 years ago is alive and could soon be allowed to meet her family, her brother said yesterday. The unexpected move, reported by Japanese media yesterday, offers hope to the families of other Japanese nationals who were taken to North Korea in the 1970s and 80s to teach their language and customs to spies.

Tokyo claims that 17 of its citizens were abducted at the height of the cold war as the communist state attempted to nurture a generation of agents who could operate inside Japan without attracting suspicion.

In 2002, North Korea admitted abducting 13 Japanese citizens and allowed five to return home later that year. It said eight others had died, and claimed that the remaining four on Japan's list had never entered the country.

The woman at the centre of the reports, Kyoko Matsumoto, was 29 when she went missing on her way to a knitting class near her home in Tottori, western Japan, in September 1977.

Though Pyongyang denies knowledge of her, the Kyodo news agency reported that Matsumoto, now married, was living in North Korea and working alongside an unidentified Japanese couple who might also have been abducted.

Her brother, Hajime, said a Chinese businessman with trading interests in North Korea gave him the information last month at a meeting in Tokyo arranged by a group campaigning for the return of the abductees.

Hajime said a woman believed to be Kyoko Matsumoto had passed a message to the Chinese contact that included details only his sister could have known. "Say hello to Ina-chan for me," she reportedly said, an apparent reference to a woman with whom she worked before her abduction.

The contact told Hajime that North Korean officials were planning to arrange the first meeting for 31 years between his sister, who is now 60, and her family in Japan. "It has become increasingly likely that Kyoko is still alive," Hajime told Kyodo. "It is hard to tell how reliable the information is, but I would go and meet her if asked."

The Japanese government said it was taking the report seriously. "If the information is true ... then we will try and resolve this through diplomatic channels," the foreign minister, Hirofumi Nakasone, said in a television interview.

Five of the abductees were allowed to return to Japan in October 2002 after a landmark summit in Pyongyang between the North Korean leader, Kim Jong-il, and the then Japanese prime minister, Junichiro Koizumi. They included Hitomi Soga, the wife of an American army deserter, Charles Jenkins, who joined her in Japan with their two daughters in 2004.

The best-known of the abductees that Tokyo believes are still in North Korea is Megumi Yokota, who was 13 when she disappeared on her way home from school in Niigata, on the Japan Sea coast, in November 1977. North Korea said Yokota, who married a North Korean with whom she had a daughter, had taken her own life in 1994 while being treated in a psychiatric hospital for depression.

Japan refuses to believe the claim. DNA tests on "remains" that North Korea said belonged to Yokota proved inconclusive.

A Japanese woman who was allegedly abducted by North Korean agents more than 30 years ago is alive and could soon be allowed to meet her family.

The unexpected move, reported by Japanese media today, offers hope to the families of other Japanese nationals who were taken to North Korea in the 1970s and 80s to teach their language and customs to spies.

Tokyo claims that 17 of its citizens were abducted at the height of the cold war as the communist state attempted to nurture a generation of agents that could operate inside Japan without attracting suspicion.

In 2002 North Korea admitted abducting 13 Japanese citizens and allowed five to return home later that same year. It said the eight others had died.

The remaining four on Japan's list had never entered the country, said Pyongyang.

The woman at the centre of the reports, Kyoko Matsumoto, was 29 when she went missing on her way to a knitting class near her home in Tottori, western Japan, in September 1977.

Though Pyongyang denies any knowledge of her alleged abduction, the Kyodo news agency reported that Matsumoto, now married, is living in North Korea and works alongside an unidentified Japanese couple who may also have been abducted.

Her brother, Hajime, said he had been given the information last month by a Chinese businessman with trading interests in North Korea. Their meeting in Tokyo was arranged by a group campaigning for the return of the abductees.

Hajime said a woman believed to be Kyoko Matsumoto had passed a message to the Chinese contact that included personal details only his sister could have known.

"Say hello to Ina-chan for me," she reportedly said, an apparent reference to a woman with whom she worked before her abduction.

The contact told Hajime that North Korean officials were planning to arrange the first meeting for 31 years between his sister, now 60, and her family in Japan.

"It has become increasingly likely that Kyoko is still alive," Hajime told the news agency. "It is hard to tell how reliable the information is but I would go and meet her if asked."

The Japanese government said it was taking the report seriously. "If the information is true we will try to resolve it through diplomatic channels," the foreign minister, Hirofumi Nakasone, said in a TV interview.

Five of the abductees were allowed to return to Japan in October 2002 after a landmark summit in Pyongyang between the North Korean leader, Kim Jong-il, and the then Japanese prime minister, Junichiro Koizumi.

The abductees included Hitomi Soga, wife of the US deserter Charles Jenkins, who joined her in Japan with their two daughters in 2004.

The best-known of those Japan believes are still in North Korea is Megumi Yokota, who was 13 when she disappeared on her way home from school in Niigata, on the Japan Sea coast, in November 1977.

North Korea said Yokota, who married a North Korean with whom she had a daughter, now 21, had committed suicide in 1994 while being treated in a psychiatric hospital for depression. Japan refuses to believe the claim and DNA tests on "remains" North Korea said belonged to Yokota proved inconclusive.

Her plight, and her parents' high-profile campaign for her return, have kept the abductions near the top of the domestic political agenda for six years.

Last month, Japan's new prime minister, Taro Aso, vowed to do all he could to bring the abductees home. "Without a resolution there can be no normalisation of relations," he said. "What we are waiting for is action by North Korea. Thirty years have passed, and this is a battle against time."

But Japan, a member of the six-party talks on the North's nuclear weapons programme, now risks losing diplomatic traction in its bid to resolve the abduction issue.

It created tension between Japan and the US last month when Washington removed North Korea from its list of states that sponsor terrorism. That move came hours after the regime agreed to resume dismantling its nuclear facilities and allow visits by international inspectors.

The US said it had removed North Korea – once a member of George Bush's axis of evil – from the terror list to breathe life into the stalled nuclear negotiations and would continue to pressure Pyongyang to resolve the abduction issue.

Japan refuses to normalise diplomatic ties or provide aid until the matter is settled, just as the US, China, Russia and South Korea are considering resuming energy assistance amid progress on the nuclear issue. Under a 2007 agreement, North Korea stands to receive a million tons of fuel oil in return for abandoning its plutonium-based nuclear programme.

According to a Japanese newspaper report, the North has decided to cancel another investigation into the abductions because it sees no diplomatic mileage in doing so. Earlier this week it also threatened to adopt an "ultra-hard line" against Japan unless it dropped the issue and relaxed sanctions.

Spirited away

North Korea's abduction programme is one of the most bizarre episodes of the East Asian cold war. It abducted more than a dozen Japanese men and women between 1977 and 1983.

Most of the victims were employed teaching Japanese to spies, while older abductees were rumoured to have been killed and their identities adopted by agents working inside Japan.

There are unsubstantiated claims that others were murdered after stumbling on North Korean agents operating on Japanese soil.

The first abduction came seven years after members of the Japanese Red Army hijacked a Japan Airlines passenger jet and forced it to land in Pyongyang, where the hijackers were granted political asylum.

After years of inaction by the Japanese government, the abductees' plight became a cause celebre in 2002 after Megumi Yao, the wife of a Red Army hijacker, told a court she had tricked one of the abductees, Keiko Arimoto, into flying to Pyongyang.

Arimoto, who married another Japanese abductee, was studying in England when she was approached by Yao.

The National Association for the Rescue of Japanese Kidnapped by North Korea, a pressure group with links to rightwing politicians, believes that the regime abducted as many as 100 Japanese citizens.

It claims that citizens were also seized from more than 10 other countries, including South Korea, Romania and Thailand.

Panasonic confirmed to day it is in talks to acquire its smaller rival, Sanyo, in a deal that would see the formation of Japan's biggest electronics maker.

The announcement came after media reports that the firms were considering a capital and business alliance reckoned by one estimate to be worth $8.8bn (£5.63bn), or about ¥140 per share.

"Panasonic and Sanyo will start discussions with the aim of maximizing both companies' corporate values by pursuing synergies between both companies," the firms said in a statement.

Panasonic is understood to have begun talks with Sanyo's main backers - Goldman Sachs, Sumitomo Mitsui and Daiwa Securities - with a view to reaching an agreement by the end of the year.

The three banks rescued struggling Sanyo in 2006 with the purchase of preferred shares worth ¥300bn (£1.97bn) for a combined stake of about 70%

The tie-up would mark a major reshuffle of the Japanese electronics industry that was unthinkable before the financial crisis and surging yen ate into corporate profits.

The move by Japanese carmakers towards hybrid and electric vehicles means that Panasonic stands to benefits from its new subsidiary's leading position in the market for rechargeable batteries.

Sanyo supplies car batteries to Ford and Volkswagen, while Panasonic is part of a battery venture with Toyota.

Panasonic would also be able to gain a foothold in the solar panel business: Sanyo is the world's seventh-biggest producer of solar cells. In turn, Sanyo will gain access to Panasonics huge customer base, built around its flat-screen, digital camera and DVD player businesses.

"As a result of this merger Panasonic will become a huge firm, the Toyota of the electrical appliance world," said Nagayuki Yamagishi, a strategist at Mitsubishi UFJ Securities.

The merger is being planned against a worrying backdrop of falling demand and higher costs for Japanese electronics makers.

Sanyo said earlier this week that profits for the last quarter had plummeted 67% to ¥4.4bn as a result of the strong yen, a fall in gadget prices and the rising cost of raw materials.

The Osaka-based firm has only just recovered from a 2007 accounting scandal that forced it to appoint its first president from outside the company's founding family. In 2004, its main chip plant was badly damaged in an earthquake, a key factor in the subsequent rescue bid by Goldman and the Japanese banks.

Panasonic, meanwhile, saw its profit fall 16% to ¥55.46bn in the three months to September.

Today's announcement came shortly after Panasonic's shares closed down 3.8% at ¥1,528, while Sanyo dipped 0.5% to ¥203.

Panasonic's president, Fumio Ohtsubo, and his Sanyo counterpart, Seiichiro Sano, were due to hold a joint press conference later today.

Profits at Toyota are on course for their biggest annual fall in 13 years after a drop of almost 70% in the latest quarter, Japan's biggest carmaker said yesterday.

Toyota, which has come tantalisingly close to overtaking General Motors as the industry's global leader, said it was facing a 63% fall in operating profit to ¥600bn (£3.8bn) to the end of next March. It said net income was projected to be ¥550bn, a fall of 68% from last year's ¥1.72tn, and that sales would likely fall 12.5% to ¥23tn.

To compound the misery, Toyota said its July-September quarter net profit had plunged 69% to ¥140bn. The profit warning threatens to bring an end to eight straight years of growth. Its executives described market conditions as "unprecedented".

"We have encountered oil shocks and a surging yen a number of times before, but have overcome those problems and achieved growth," said executive vice-president Mitsuo Kinoshita.

"The financial crisis is having a negative impact on the real economy and automotive markets, especially in developed countries, are contracting rapidly. This is an unprecedented situation. It's impossible to tell when things will start to improve." Toyota shares closed down 10.3% and have lost 37% this year.

A second Japanese carmaker, Isuzu, also cut profit targets yesterday. It now expects to make ¥40bn, less than half its initial forecast of ¥85bn.

Profits at Toyota are on course for their biggest annual fall in 13 years after a drop of almost 70% in the latest quarter, the Japanese carmaker said today.

The group, which is Japan's biggest carmaker and has come tantalisingly close to overtaking General Motors as the industry's global leader, said it was facing a 63% fall in operating profit to ¥600bn (£3.8bn) through to the end of March 2009.

It said net income was projected to be ¥550bn, a fall of 68% from the ¥1.72tn the carmaker earned last year. Sales are projected to fall 12.5% to ¥23tn, it said.

To compound the misery, the firm said its July-September quarter net profit had plunged 69% to ¥139.8bn.

The profit warning threatens to bring an end to eight straight years of growth for the Nagoya-based company.

Having built its challenge to GM on healthy US sales of its Prius hybrid and Camry sedan, Toyota now faces a fate similar to rivals Honda and Nissan, both of which have been forced to cut their full-year forecasts.

They have all been forced into drastic revisions by the credit crunch and the surging Japanese currency, which last month rose to a record against the dollar, eating into profits from US sales.

A second Japanese carmaker, Isuzu, also cut profit forecasts today. It now expects to make ¥40bn, less than half its initial forecast of ¥85bn.
Isuzu, which is rumoured to be mulling the acquisition of GM's midsize truck business, said it would decrease truck production by 28,000 vehicles a year at its main plant outside Tokyo.

It said global truck shipments would decline to 286,000 vehicles, 32,000 down on its initial target. It blamed the dismal figures on a dramatic drop in demand in the US and damage to exports inflicted by the rising yen.

Toyota executives described current market conditions as "unprecedented."
"We have encountered oil shocks and a surging yen a number of times before, but have overcome those problems and achieved growth," the executive vice president, Mitsuo Kinoshita, told reporters.

"The financial crisis is negatively impacting the real economy worldwide and automotive markets, especially in developed countries, are contracting rapidly.

"This is an unprecedented situation. It's impossible to tell when things will start to improve."

The forecasts shocked industry observers. In May Toyota said it was expecting operating profits to reach ¥1.6tn and a net profit of ¥1.25tn.
The quarterly results and forecast were "far worse" than expected, said Yasuaki Iwamoto, car industry analyst at Okasan Securities in Tokyo. "I was extremely surprised."

The global economic slowdown and strong yen threaten to end eight straight years of growth for Toyota. While sales rose in Asia, South America and Africa in the first six months of the year, those gains were dwarfed by the crushing losses Toyota suffered in Europe and North America.

Like many Japanese exporters, Toyota's shares have plunged, losing 37% since the start of the year. They closed down 10.3% in Tokyo today.

Toyota said its net profit fell 47.6% to ¥493.47bn for the first six months of the year; operating profit dropped 54.2% to ¥582.07bn.

GM is due to reveal the extent of its third-quarter losses tomorrow.