Japan announced plans yesterday for a third stimulus plan for the world's second biggest economy against a conflicting global background of rising unemployment and improving markets.

Two days before world leaders gather in London to chart a way out of the global financial crisis, Japanese Prime Minister Taro Aso said he planned an extra budget to finance efforts to shore up his flagging economy.

"I instructed the government and ruling parties to compile steps to cope with the current economic situation, which will include submission of the extra budget," Aso told reporters.