Yen slumps, Nikkei up on bold BOJ

TOKYO - The yen tumbled while Japanese stocks and government bonds rallied on Monday as the Bank of Japan lost no time embarking on its ambitious stimulus drive, but weak US jobs data and regional risks such as North Korea weighed on other assets.

European markets were likely to inch higher, with financial spreadbetters predicting London's FTSE 100 .FTSE, Paris's CAC-40 .FCHI and Frankfurt's DAX .GDAXI to open as much as 0.5 per cent higher. US stock futures were up 0.1 per cent to suggest a firm Wall Street open. .L.EU.N

The MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS fell as much as 0.5 per cent to a four-month low before trimming some losses to fall 0.3 per cent. Shanghai shares .SSEC led the decline, after falling sharply to a 3-1/2-month low earlier as bird flu worries hit tourism-related sectors and the property sector lost ground on more sales curbs.

South Korean shares .KS11 dipped to new four-month lows and the South Korean won fell to its weakest level in more than eight months of 1,139.6 against the dollar, as increasingly strident rhetoric by North Korea raised concerns that Pyongyang may conduct a nuclear test or a missile launch this week.

Friday's weaker-than-expected US nonfarm payrolls report raised worries about slowing growth momentum and weakening demand from the world's largest economy.

But any bearishness toward the dollar was overwhelmed by speculators squarely focusing on the prospect of a sustained period of yen weakness as the BOJ set about implementing the world's most intense monetary stimulus.

"The oil markets are currently enjoying the support of upcoming liquidity after the BOJ announcement last week, but they are still digesting the disappointing jobs data from the US," said Ker Chung Yang, senior investment analyst at Phillip Futures in Singapore.

Brent crude oil rose 0.4 per cent to $104.56 a barrel after touching an eight-month low on Friday on worries about weakening fuel demand in the US and US crude futures inched up 0.2 per cent to $92.88.

The BOJ conducted its first government bond buying operation on Monday since announcing monetary easing on a stunning scale, saying it will buy one trillion yen ($10.3 billion) of Japanese government bonds of between five and ten years maturity, and 200 billion of bonds with maturities exceeding 10 years.

The dollar jumped a full yen in early Asian trading to hit 98.85 yen, the highest since June 2009, while the euro climbed as far as 128.42 yen, its highest since January 2010. The Aussie dollar soared to 102.34 yen, the highest since July 2008.

Japan's Nikkei stock average .N225 jumped as much as 3.1 per cent to its highest since August 2008 earlier, before shedding some gains. .T

"The BOJ's bazooka has sparked the buying of Japanese stocks, especially domestic sectors, like real estate," said Yasuo Sakuma, a portfolio manager at Bayview Asset Management.

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