NEW YORK - The yen rose against the dollar and euro on Tuesday after the Bank of Japan said its open-ended commitment to buy assets would kick in only next year, but the prospect of more monetary accommodation by a central bank appeared to lend support to a broad range of financial assets, including stocks, gold and oil.
Analysts said the yen's rise would likely be short-lived and that on a medium-term basis, it would weaken.
The euro benefited from a surprisingly sharp jump in investor sentiment in Germany. Analysts said, however, that the currency's recent climb could put the euro zone at a competitive disadvantage when its economy needs to grow.
Hopes that the global economy would improve allowed cyclical sectors to lead the Standard & Poor's 500 to a five-year high.
Investors waited for earnings results from technology companies due after the closing bell and were not disappointed.
IBM reported fourth-quarter earnings and revenue that beat analysts' forecasts and Google Inc said net revenue in its core Internet business increased more than 20 per cent in the fourth quarter.
Shares of Google were up roughly 4.5 per cent at US$734.46 in after-hours trading.
"Especially with the lull in economic data this week, earnings will be a big driving force for equities this week," said Jonathan Garber, macro analyst at Briefing.com in Chicago.
A catalyst from positive earnings results is needed for stocks to move still higher, he said, while mixed earnings with "lower guidance" would make another upward move more difficult.
Signals that Republican leaders in the US House of Representatives would pass a nearly four-month extension of the US debt limit were also helpful for riskier assets.
Global stock markets were mixed. Japanese equities .N225 and world indices rose on the BoJ news, but European shares fell on a potential price war in French telecommunications.
The euro pared sharp losses against the yen and the dollar after a German ZEW survey showed economic sentiment at its highest since May 2012.
Front-month Brent crude oil futures rose 71 cents to settle at $112.42 a barrel, supported by Bank of Japan plans for asset buying and strong investor confidence data from Germany.
Gold rose as the Bank of Japan's pledge to launch an economic stimulus effort and a five-year high in US equities prompted nervous investors to buy gold. Spot gold was up 0.1 per cent at $1,691.24 an ounce by 3:29 p.m. EST (2029 GMT).
Japan's central bank, under intense political pressure to overcome deflation, doubled its inflation target to 2 per cent. The BoJ also said it had decided to switch to an open-ended approach to buying assets each month next year, setting no deadline for completing the purchases.
"The yen strengthened after weakening since mid-November in anticipation of the BoJ's plan," Garber said.