Japanese Finance Minister Shoichi Nakagawa has said he will resign following accusations he was drunk at a G7 press conference in Rome.

Nakagawa slurred his words, appeared bewildered, and was unable to recall Japanese interest rates.

Saying he had "no more than a glassful" of wine before the meeting, he blamed cold medicine. But he admitted to drinking during his flight to Rome. On return to Japan, he faced Opposition demands to quit, and finally fell on his sword.

"I apologise for causing commotion from my careless health management," Nakagawa, 55, said, adding: "I have caused trouble to the people."

The resignation, a new blow to Prime Minister Taro Aso's teetering government, comes as confidence among Japanese manufacturers hit a near-record low. The Reuters Tankan monthly poll, a companion to the official Bank of Japan Tankan survey, showed most respondents remained pessimistic.

Aso's popularity has plunged as lawmakers on both sides of parliament criticised his handling of the economic crisis. A series of scandals and mis-statements drove his approval rating down to 9.7%.

Nakagawa's departure leaves Japan without a finance minister as companies fire thousands of workers and the nation heads for its deepest recession since the Second World War.

Parliamentary deadlock has prevented Aso from spending 10 trillion yen (£76 billion) to tackle the economic slide. Gross domestic product shrank by an annualised 12.7% last quarter, the most severe contraction since 1974.