Japan's financial markets started the New Year's first trading Jan. 6 with ominous news: The dollar momentarily reached 117 yen -- its highest level since March 1993.Although the U.S. currency later fell back to the 116 yen range, and the Nikkei Stock Average of the Tokyo Stock Exchange subsequently rose slightly above its closing figure for 1996, businesspeople said the sluggish markets reflected traders' disappointment with the slow pace of Japan's economic reforms.At one point Jan. 6, the dollar hit the 117 yen level for the first time since March 1993, then edged down on profit-taking. A senior Finance Ministry official promptly warned that an excessively weak yen is not favorable for the Japanese economy.During a news conference in the afternoon, Vice Finance Minister Tadashi Ogawa said the ministry would "take appropriate action against erratic movements." Ogawa's remark was seen as an indication that Japan's currency authorities are ready to carry out yen-buying, dollar-selling intervention if the yen's fall against the dollar judged too rapid. In a direct reaction to Ogawa's comment, the dollar slipped below 116 yen in Tokyo, staying in the upper half of 115 yen at around 6:30 p.m, down from quotes late Jan. 3 of 116.20-30 yen in New York. At the TSE, top financial officials and female employees with colorful kimono attended the customary New Year banzai and hand-clapping ceremony to try to pep up the market, which is hovering at roughly half the level it did in the turbo-driven bubble economy. In that era, stock prices always shot up on the first day of trading, with many investors wanting to place buy orders in an act believed to bring good luck in the new year.Despite the buoyancy in overseas markets, Tokyo was flat last year, reflecting lingering jitters over the recovery of the Japanese economy. On the TSE Jan. 6, traders watched the Nikkei average of 225 selected issues drop to 19,203.53 as few investors placed good-luck orders. The average managed to close at 19,446, up only 84.65 points, or 0.44 percent, from Dec. 30, the last trading day of 1996.The current stock levels are far below the high of 38,915.87, which was set in late 1989. "The stock market carried over the negative tone of the previous year in early trading today," said Yasuo Ueki, general manager of equities operations at Nikko Securities Co.On the first day of trading, the dollar's further appreciation against the yen depressed sentiment among Tokyo investors, who once sent the key Nikkei gauge down nearly 150 points. "Market players are seriously keeping an eye on the movement of the currency market," Ueki added.The dollar's sprint to near 117 yen in early morning trading stirred fears that foreign investors would sell Japanese stocks to cut foreign exchange losses. However, the Nikkei index gradually recouped early losses in line with the increase in futures prices toward the session's close. Trading was dominated by pension funds, traders said.The financial markets' wild fluctuations dampened the hopes of business leaders for the new year. "The triple weakness in the stock, currency and bond prices reflects the markets' disappointment over the lack of progress in economic reforms," Jiro Ushio, chairman of the Japan Association of Corporate Executives (Keizai Doyukai), told a Jan. 6 news conference.Some economists said growing concerns over the future course of the Japanese economy are behind the yen's recent fall against the dollar. Ogawa of the Finance Ministry, however, said there is no change in the ministry's assessment of the economy. "The economy's underlying condition is becoming solid," he said.