Investors in Japan are in a tizz after allegations surfaced about one of the country's most popular internet companies.

On Monday, it emerged that the offices of Livedoor Co - which operates one of Japan's leading portals - had been raided by officials investigating allegations that the company had tried to boost its share price by spreading false information.

But fresh reports from Japan today suggest that the authorities have opened a second probe - this time into allegations that the internet company covered up losses of one billion yen (£5m). Japanese news site Kyodo reports that the firm is suspected of cooking the books by transferring profits from affiliate companies to the main company.

Now officials are wading through thousands of emails to try and figure out if there is any truth in the allegations. But it gets worse. News about Livedoor set off a flurry of panic selling. In turn, this overloaded the computer systems at the Tokyo Stock Exchange (TSE) forcing it to suspend trading early for the first time in more than fifty years.

Japan's prime minister tried to calm investor nerves by insisting that Japan's economy was stable.

Kyodo quotes Prime Minister Junichiro Koizumi as saying that the events triggered by Livedoor are only "of a temporary nature as economic conditions are solid overall". ®

Related stories

• Jailed Japanese net mogul launches appeal (22 February 2008)
• Japanese internet guru pleads not guilty (5 September 2006)
• Internet boss arrested as Livedoor probe continues (23 January 2006)
• Japanese firms confirm talks to create chip powerhouse (28 December 2005)
• Japan triumphs with MP3 toilet seat (7 December 2005)
• Japanese 'iPod tax' threat fades (1 December 2005)
• Japanese asteroid probe hits paydirt (28 November 2005)
• In brief Japan greenlights second landing attempt (25 November 2005)