Tokyo - Japanese Prime Minister Taro Aso on Thursday announced a new economic stimulus package worth about 26.9 trillion yen (276.33 billion dollars) to battle the impact of the global financial crisis, as speculation over an interest rate cut by the Bank of Japan mounted.

"The most important thing is to allay concerns about people's livelihoods," Aso said at a press conference.

The government stimulus package, the second since August, includes 2 trillion yen in financial assistance for all households to jump-start consumption and up to 6 million yen in tax breaks for housing loans for 10 years.

Japan's central bank, which meets on Friday, is facing growing pressure to cut its interest rate to 0.25 per cent. Analysts said falling oil prices and Japan's yen strengthening against the dollar made a rate cut more likely as deflation fears rise.

The Bank of Japan kept its key interest rate at 0.5 per cent since February 2007.

The package would cut express toll fees and secure employment for small businesses and in rural areas as well as provide support for 600,000 workers.

Businesses would be encouraged to offer full-time contracts to part-timers and those with unstable employment contracts while premiums for the national unemployment insurance programme would be cut.

About 600 billion yen would be allocated to stimulate regional economies. The funding would be partly covered by reserves in Japan's special account budgets and not deficit-covering bonds, the government said.

Japan announced its first stimulus package in late August, amounting to 11.7 trillion yen and designed to dampen the impact of rising energy and raw materials prices.

Aso said he plans to submit a second supplementary budget to parliament during an extraordinary session scheduled for late November to cover the costs of the new plan.

The Japanese parliament approved in October a supplementary budget of about 1.81 trillion yen. (dpa)