welcome back to "newsline." i'm yuko aotani in tokyo. currency traders in tokyo and shanghai are doing something they've never done before. they've started direct trading between the japanese and chinese currencies. the yen/yuan deal has raised expectations of increased financial transactions between asia's two largest economies. brokers made their first trades at the start of the day on the trading floors of japanese banks. the initial exchange rate was set at 12.33 yen to the yuan. japanese and chinese officials

agreed to the deal last december. the arrangement removes the interim step of converting to and from the u.s. dollar. direct trading will reduce transaction fees and lower the risks involved in settling trades. investors see a lot of threats out there. they are worried about the health of spanish banks, the effect that will have on european debt and the pace of u.s. growth. so they are heading for the exits. the euro fell to its lowest point against the japanese yen in 11 1/2 years. the fears about the health of spain's financial sector and political uncertainty in greece are leading to worries about a deepening of the crisis in the eurozone. one euro was quoted at 96.48 yen. it was the lowest exchange rate since september 2000. investors say their concerns about the eu debt prompted them to sell the euro. a new report about slowing growth in the u.s. made them sell off the dollar. they turned from those

currencies to the perceived safety of the yen. japan's finance minister said he's prepared to step into the currency market if necessary to stem the yen's rise. he made the remarks on friday morning. >> translator: the yen is rising rapid rapidly. this does not seem to reflect the fundamentals of the japanese economy. we will take appropriate and resolute measures. if the trend continues to be excessive. investors are fleeing from spain's spanish banks have been left with more and more bad loans on their books. and investors fear the debt could topple the economy. >> reporter: spain has the fourth largest economy in the eurozone. but the country is mired in a recession. more than 5 million spaniards find themselves without a job.

that's nearly a quarter of the working population. and the picture is even worse among young people. 1 in 2 is unemployed. >> translator: i want a job, but the situation is the worst ever. >> translator: i'm thinking about leaving spain and working in another country. >> reporter: spaniards took advantage of low interest rates during the 2000s and drove a boom in housing. they ended up building more houses than they really needed. in 2007, that reality burst the bubble. about 22% of lending by spain's financial institutions is for construction and real estate. but about 17% of loans for construction and around 20% of loans for real estate are in default or close to it.

the nationalization last week of the country's third largest commercial bank, bankia, stoked fears about the health of financial institutions. >> so what's the outlook for the euro? we spoke with the head of japan rates and foreign exchange research at jpmorgan chase bank in japan. he warns that the downside risks remain for the single currency but says the fall is limited. >> the market is really worrying about the situation in greek and in spain, and then probably it's a little bit difficult to expect spain -- spain's program to be resolved so soon. so it takes a long time. but in terms of the greek, there's a chance that if their election result is favor for the market, there's a chance that they are -- the euro to rebound. i think that there's still downside risk, but at the same

time, the rebound is not that far away. >> a weaker euro means a stronger yen. and that could hurt japan's exports. but he says the possibleities of more government intervention in the currency market is still low. >> especially the current situation, what is the most serious problem is euro. european countries are facing a very serious situation. so actually lower euro is helpful for their economy. so if japan intervene to the yen or euro/yen market, it's against the european economy. so i don't think japan can weaken their own currency, our own currency at the expense of the european economy. newspapers in greece are describing a pensioner as the

latest victim of austerity. he was unable to pay his debts and committed suicide. the man in his 60s hung himself at a park on the outskirts of athens. he left a suicide note. it said he had never committed a crime and always worked hard but recently got into debt. the man wrote that he hopes his grandchildren will never be born in greece. >> the politicians are thinking about only for themselves, what is good for themselves, not for the people. for the common people. >> in april, a 77-year-old pensioner shot himself in front of the parliament building. the news resonated with people across the country. voters are scheduled to return to the polls for another parliamentary election on june the 17th. their choices will determine how the government will proceed with a package of tax increases and spending cuts. human rights activist chen guangcheng says china should

obey its own laws and bring the government official who imprisoned him to justice. the blind activist escaped house arrest in april. he sought protection at the u.s. embassy in beijing. then last month, chinese authorities allowed him to leave for new york. he said the treatment he and his family received was unforgivable. he said china's problem is not a lack of laws but failure to follow them. he called on the country to develop its own path to democratic rule. >> translator: china should model its own democracy on asian countries like south korea and japan. >> chen said the chinese government has never before allowed someone like him to study in the u.s. he added that he has no intention of seeking asylum. chen will study u.s. and international law while in new york. he plans to write a book about his experiences. many questions remain about the 1989 military crackdown in beijing's tiananmen square. people can't agree on how many died or how many were wounded. and it's not clear who was responsible for ordering troops to shoot demonstrators. now relatives of the victims are

demanding the government take a closer look at the incident ahead of the 23rd anniversary. it's clear that on june 4th, 1989, after weeks of peaceful protests, the military opened fire on demonstrators. but details about what happened before, during and after remain sketchy. relatives of the victims released a statement in an attempt to find closure. they want government officials to clarify what happened and to pursue those responsible. the statement says it's becoming more difficult to understand why the protests broke out. the group says issues such as human rights violations, the gap between rich and poor, and corruption have only got worse over the past decade. they say that while the economy grew rapidly under the administration of hu jintao, the government missed an opportunity to bring about greater democracy and to reassess the protests. pakistan's largest islamic militant group has released footage of its april attack on a prison. the attack freed some 400 inmates, including major criminals.

the video image sent to media outlets by the pakistani taliban showed preattack planning and the prison layout. about 150 militants attacked the prison in the bannu region firing rifles and throwing grenades. police say the clash continued for nearly two hours. the video also shows militants breaking into cells to free prisoners. gun shots can be heard in the background. there is also footage of three pakistani soldiers detained by the group. >> 150 of the 400 freed prisoners have been recaptured. several local officials have been replaced since the attack.

the chinese smoke more sig retss than people in any other country. the world health organization puts the number of chinese smokers at more than 300 million. just one day before the may 31st world no tobacco day, the chinese justice broke its silence on the matter. for the first time it officially acknowledged that smoking causes serious illnesses like lung cancer and strokes. and our reporter is now in beijing studio. so what's the government saying about smoking now? >> it says the smoking habit is widespread. more than 1 million people die every year from diseases related to smoking. in a report released on wednesday, it also points out that if no measure is taken, the number of people who died from diseases related to smoking could reach more than 3 million

per year by 2050. it urges people to quit smoking and stresses that the earlier, the better. the chinese authorities already do not allow smoking in public spaces like schools, hospitals and restaurants. people who violate the regulation face a fine. despite this, many chinese keep on smoking. these people are receiving acpuncture to quit smoking. the practice involves inserting needles at certain places in the patient's body to correct the body's imbalances. patients come once or twice a week for 30 minute session. china's government funds research for this treatment. >> we treat patients according to their situation so that we can ease side effects from quitting smoking.

>> translator: my mind is refreshed after the treatment. >> reporter: 40-year-old sonji has been smoking for nearly 20 years. >> translator: i completely quit smoking. >> reporter: he's at a junior high school. he used to smoke 1 1/2 packs a day but last december, he developed problems. if they got worse, he might die. he started the treatment a month ago. whenever he has an urge to smoke, he follows his doctor's orders and does this. >> translator: this will get rid of my craving. >> reporter: the chinese government is also promoting anti-smoking campaigns. high school students here make

an appeal not to smoke in public places. they ask people to support the message. >> translator: i'm going to tell my friends they must stop no matter how hard it is for them. >> reporter: but smokers are still a minority in china. most ignore the no smoking signs. you often come across scenes like this in beijing. >> translator: have you ever thought about quitting smoking? >> translator: never. >> translator: it's impolite to refuse when friends offer a cigarette. so i just can't quit. >> reporter: smoking is engrained in chinese social life. people even give cigarettes as

gifts. there are a lot of luxury brands but cigarettes are usually cheap. this is one of the most popular cigarette brands in china. you can buy it for about 80 cents. according to the literature, 50% of chinese smokers spend a dollar or less per pack, which is less than one-tenth of what new yorkers have to pay. there's warnings on chinese packs are smaller than in other countries. an expert says most chinese still do not know how risky smoking is. >> less than a quarter of the people were able to accurately identify that smoking was responsible for heart disease, stroke and lung cancer all combined. so there's a lot of work to be done in the field of knowledge. >> reporter: to vast numbers of chinese, lighting up is part of daily life.

if the government wants people to quit, it will have to take a more aggressive approach. >> all right. so are there any other measures the chinese government can take? >> raising taxes on tobacco is one option. the world health organization says the tax on the most sold brand in china is 26%. that's much lower than the tax people in many other countries pay. south africans, for example, pay about 40%. the studies show that even a small tax pays off. the increased price of the cigarettes results in a noticeable drop in the number of smokers. the question is, would the chinese tobacco industry accept the tax rates? the local newspaper says the industry employs more than 10 million people and generates government revenue. some experts say that's one reason why tobacco controls

haven't gained a foot forward in china. it will be interesting to see how much headway the government makes. >> thank you susumu koijima in beijing. now in other news, animals in pet stores in japan will get a little more sleep at night, thanks to a new regulations. pet store owners will no longer be allowed to display their wares in brightly lit windows overnight. the revised law bans pet shop owners from subjecting dogs and cats to bright lights from 8:00 p.m. to 8:00 a.m. it ames to protect animals from possible health hazards resulting from such treatment. the government will delay implementing similar regulations at so-called cat cafes where cat lovers play and relax with cats. those businesses can continue to operate until 10:00 p.m. for two more years. the law also requires that for profit animal shelters and pet auctioneers register with their prefectural governments. this is due to hygiene concerns

and difficulties tracing the medical records of pets sold at auction. computer wizards from around the globe are competing to find out who is best at cybersecurity. they are headed to moscow for an annual contest called capture the flag. it may appear like fun and games but the goal of the competition is to get participants to make the best use of their knowledge to help prevent cyberattacks. 12 teams pitted their skills against each other in the preliminary round on wednesday and thursday. a team of college students from japan took part for the first time. they had to race against the clock to access their opponent's data. >> translator: social infrastructure could be damaged if information security is lax. i want to become an engineer and help make information security more reliable. >> the team failed to advance to the finals. the students finished in the ninth place. the dragon shuttle may have launched a new era in the

private sector exploration of outer space. it's the world's first privately owned craft to dock with the international space station and return to earth. u.s. firm spacex developed the unmanned craft. it left cape canaveral in florida on may 22nd carrying supplies. astronauts unloaded the dragon and filled it with cargo for the return trip. the spacecraft endured temperatures of more than 1,000 degrees celsius as it re-entered the earth's atmosphere. it splashed down in the pacific ocean on thursday, roughly 900 kilometers off the coast of california. >> this really couldn't have gone better. we look forward to doing much more missions in the future and continuing to upgrade the technology and push the frontier of space transportation. >> only shuttles developed by the u.s. or russian governments had made the trip before. the dragon's success is expected to give a boost to the obama administration's push to privatize space exploration.

people in northern italy are still cleaning up after they were hit by a second earthquake in two weeks. residents died when buildings weakened by the first quake came down upon them. local businesses are struggling to recover. those who work in the cheese industry, for example, say the quake made many of their products unfit to sell. nhk world's kyoto glanz reports. >> reporter: many diners wouldn't dream of turning down parmesan cheese. the producers have to meet exacting standards if the cheese is to be classified as parmesan. milk, for example, must be taken from the cow at specified times. in all, the quake damaged

300,000 wheels. this year's production may fall by more than 5%. now i'm in a storage house for parmesan cheese. since the earthquake hit the area, cheeses were falling down and 70% of the products got damaged. that means the cheesemakers will lose almost $38 million. even the quality of the undamaged cheese is at risk. the warehouse lost equipment that ensures the cheese ages properly. ivano heads the coop that produces parmesan cheese. the earthquake hit two years after he set up the business. it had just started turning a profit.

>> translator: the cheese affected by the quake will not meet the standards for being sold as parmesan. i want to salvage the cheese from the warehouse as quickly as possible. >> translator: amid europe's debt crisis, people there have been buying less cheese. so the producers hope to make up for the slump by selling the chee abroad in countries like japan. japanese buy more than other asians. >> translator: our overseas sales will definitely be affected. the drop in cheese shipments is likely to result in a slight increase in the price overseas. >> reporter: parmesan cheesemakers still don't know exactly how much cheese they'll be able to sell.

but no matter which way they slice it, they know it's going to be a tough year. kyoto glanz, nhk world. we're seeing cloudy skies here in tokyo. will it turn for the better or not? let's turn to rachel ferguson at the weather desk. >> hi there. we're going to be seeing some showers later on this evening. there is going to be some more consistent rain down towards the south, though, however, because the rainy season has started for many other areas in the region. we've got this stalled out front here across taiwan and the southern japanese islands. that's been bringing heavy rain for the last several days. and that's going to continue into the next 24 hours. the southwest monsoon has also been getting started here affecting parts of southwestern

china as well as areas in and around the bay of bengal. so northeastern india, bangladesh, myanmar as well seeing periods of heavy rain as well as the indochina peninsula. you'll also notice we have a storm symbol here. a tropical depression just east of the philippines. and it's likely to become a tropical storm by friday night. so this one continuing to bring flooding downpours across the philippines into the next 24 hours. and it will continue its path north just swerving to the east of japan into next week. we'll keep you updated on that story. let's go now to north america. out towards the west, things are looking mostly high and dry. from the plains and east it's going to be a different story. severe storms are impacting texas up through the ohio valley. today your overnight thursday into friday looks like this. anywhere in the red, severe storms, damaging winds porks tential for tornadoes, as well as hail. as well as the rain, of course. and then that's going to be pushing further east. the severe area coming right into the mid-atlantic on friday during the dayte will have

another system moving down through the plains. and that means that the texas panhandle is going to be seeing the really severe weather. plenty of widespread rain as well starting to move in through the west. now temperatures down in the southwest are going to be continuing to be way above average. 44 degrees in phoenix. so the desert southwest seeing extreme heat as we head into friday. and saturday beyond. let's head into europe last. we've got a new system coming in from the atlantic which is going to be impacting the british isles and down into the southwest as well. at the moment, gusty winds and heavy rain across germany coming into the baltic states and down in towards the northern balkans as well. your friday outlook looks something like this. the jet stream dipping down towards the mediterranean. chilly and unstable weather dominating much of the continent. hot and dry across the southwest at the moment. but that's going to change into the weekend as a new atlantic

system starts to impact both spain and portugal. here are your temperatures for friday then. 22 in rome. 29 in athened. but much cooler up towards the north. 13 in stockhome. 15 in berlin. london 18, but that will be going down to just about 11 degrees on sunday. so more like the end of march than the beginning of june. i'll leave you now with your extended forecast.

and our top story at this hour once again -- foreign exchange traders are seeing another sign today of the rising economic power of china. they are trading the yuan directly for the japanese yen. something they've never done before. brokers made their first trades at the start of the day on the trading floors of japanese banks. the initial exchange rate was set at 12.33 yen to the yuan. the arrangement removes the interim step of converting to and from the u.s. dollar. and the deal has raised expectations of increased financial transactions between asia's two largest economies. and that's all for now on this edition of "newsline." i'm yuko aotani in tokyo. we'll be back with more news at the top of the hour, so do join

us then. thanks very much for watching.