Senior LDP officials, including LDP secretary-general Taku Yamasaki, agreed to outline the plan in time for a meeting between Koizumi and U.S. President George W. Bush when they meet in New York on Sept. 12, it said.

"If we take no measures, interim corporate results to be released later this month will be severe," one of the participants into the LDP meeting said, according to Jiji.

Koizumi is expected to hold an emergency meeting on Monday with Finance Minister Masajuro Shiokawa, Financial Services Minister Hakuo Yanagisawa and other key ministers to discuss the economic measures, according to Kyodo News Agency.

The measures may include the reinforcement of bad-debt buyback functions of a state-run financial institution, tax cuts and the swift implementation of a national budget, Kyodo said, qouting government sources.

But expectations from the planned measures are already low.

"Investors have been disappointed several times by the government's previously announced anti-deflation measures," said Chuo Securities investment manager Akira Nakamura.

"I think this time, lip service by politicians will not work. Investors are waiting for proper measures," Nakamura said.

Earlier in the day, Shiokawa said the government must consider the impact on the economy of the weak stockmarket before taking any action.

"Before considering any stockmarket measures, we need to first discern the possible impact of the recent stockmarket tumble on the economy, as well as the possibility of the U.S. stockmarket. declines creating havoe on the Japanese stockmarket. from now on," Shiokawa told reporters.

Japan is under pressure to boost economic growth as stock prices slump on bourses worldwide due to concerns about a global economic downturn.

"The sluggish growth of the Japanese economy has been a concern to the rest of the world for 12 years now," U.S. Treasury Secretary Paul O'Neill told reporters on Thursday at a meeting of Asia-Pacific ministers in Mexico.