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TOKYO - The Bank of Japan (BoJ) is likely to leave interest rates on hold when it holds a policy meeting next week because of continued uncertainty about the US economy, Jiji Press agency reported late Friday, citing unnamed sources close to the BoJ's Policy Board.

"BOJ policymakers have no choice but to skip an interest rate hike this month as they cannot assess the course of the world's biggest economy," Jiji said.

On the Tokyo Stock Exchange on Friday, the 225-issue Nikkei average fell 874.81 points, or 5.4 per cent, from Thursday to end at 15,273.68, the lowest close since April 7, 2006. The Nikkei has lost about 3,000 points from its level at mid-July, when the BOJ last held a monetary policy meeting.

The Policy Board members are believed to have tilted toward taking a stance of keeping a close eye on developments in global financial markets, which have been in turmoil this week because of US subprime mortgage woes, the Jiji report said.

In July, the Bank of Japan left its super-low interest rates on hold for a sixth straight meeting, opting to wait for further evidence that the economic recovery is taking root.

The vote was split 8-1, with one policy board member calling for a quarter-point rate hike -- underpinning expectations of another rate rise within the next couple of months.

However, if the BOJ decides to raise interest rates in the midst of market confusion, the yen could gain additional ground and stocks could lose even more ground, the Jiji report said.

The nine BOJ policymakers, including Governor Toshihiko Fukui, are believed to be considering a rate hike in September or later after confirming that the financial markets have regained stability, it added.

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