Ashikaga's collapse brought public apologies from bosses

Ashikaga Bank, from Tochigi to the north of Tokyo, admitted on Saturday that it had gone bust.

The government announced that it was taking over all Ashikaga shares, making the bank the second to fall into public hands this year.

The news calmed uncertainty about the bank, and the Nikkei index leapt 3%.

The Nikkei 225 index's closing level was 10,403.27, a rise of 302.7 points for a three-week high.

The dollar was rising on Monday as well, as positive economic data in the US combined with a long weekend for the US Thanksgiving holiday.

At the close on Monday in Tokyo, the dollar was worth 109.56 yen, up 0.22 yen on Friday.

The market gains accompanied news from the Bank of Japan that it is planning to inject one trillion yen ($9.1bn; £5.3bn) into the markets to stabilise them following the nationalisation.

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Ashikaga's shares officially passed into public ownership on Monday morning, in the wake of the bank's announcement on Saturday that its debts exceeded its assets.

Earlier this year, the Ministry of Finance took over failing Resona Bank, which last week turned in trillion-yen losses at a time when many of the nation's banks were finally moving into the black.

Resona's shareholders were compensated, in contrast to the zero-cost takeover of Ashikaga - a tough decision that in itself was judged by many observers to be positive, and could be a sign of things to come.

But the recovery was limited to the big national banks, and many fear that more in the regional sector may follow where Ashikaga has led.

Ashikaga has already been bailed out once, when the government sunk 135bn yen into its coffers to try to support its balance sheet.

That money, one official said, will "very probably prove unrecoverable".