- Title: JAPAN: Japanese markets rise on expected BOJ meet, economic stimulus package
- Date: 31st August 2010
- Summary: TOKYO, JAPAN (AUGUST 30, 2010) (TV TOKYO - NO ACCESS JAPAN/CLEARED FOR INTERNET ACCESS/SEE ABOVE FOR FURTHER RESTRICTIONS) BANK OF JAPAN GOVERNOR MASAAKI SHIRAKAWA ARRIVING AT THE BANK OF JAPAN OFFICIAL ARRIVING AT BANK
- Embargoed: 15th September 2010 13:00
- Location: Japan
- Country: Japan
- Topics: Finance
- Reuters ID: LVAEC1XX75KNF39CATWCPWYE9CVI
- Story Text: Japan's Nikkei average rose 3.1 percent on Monday (August 30) after the yen slipped as the Bank of Japan (BOJ) began an emergency policy meeting and after revised second quarter U.S. GDP was less gloomy than expected.
Expectations that steps by Japanese authorities aimed at stemming strength in the yen led to short-covering, particularly in shares of exporters, though gains could lose steam if there are no major surprises from the BOJ meeting, market players said.
Some analysts questioned whether the central bank would take steps bold enough to stem a rise in the Japanese currency that hurts exports and may delay Japan's exit from deflation.
BOJ Governor Masaaki Shirakawa will hold a news conference at 2:30 p.m. (0530 GMT) after the meeting. He will also meet with Prime Minister Naoto Kan in the afternoon, Jiji news agency said.
The BOJ is widely expected to loosen monetary policy by expanding its cheap fixed-rate loan programme for banks, which was put in place in December last year and expanded once in March.
Last week, Federal Reserve Chairman Ben Bernanke also told central bankers at a conference in Jackson Hole, Wyoming the recovery has weakened more than expected but the U.S. central bank was ready to take further steps if needed to spur the recovery.
The benchmark Nikkei gained 274.33 points to 9,265.39, after rising 1 percent on Friday (August 27). It climbed closer to 9,350, near its 25-day moving average which has served as resistance this month.
On Friday, U.S. stocks gained 1.7 percent as strong buying interest at a key technical level and short-covering sparked the market's comeback.
Gross domestic product growth, the measure of total goods and services output within U.S. borders, was revised down to 1.6 percent, from 2.4 percent. Many economists had forecast an even bigger downward revision to 1.4 percent growth.
Expectations were also on the Prime minister economic stimulus plans which he vowed to announce on Monday (August 30).
Speaking to the stimulus committee, Kan said that there is a lot of work to do whether it was about the strong yen or the unemployed and that these issues needed to be dealt with swiftly and they are not temporary solutions.
Kan met with members on Monday to hammer out the details for the plans.
However, Bank of Japan watchers, including former deputy governor of Bank of Japan Shijiro Ogata, said political stability was needed before all these steps could be put in place.
"Countries outside Japan, I am afraid, may look at Japan as very political fragile country on the top of the rather weak economy. And of course, prime minister alone or one government alone cannot solve however I am hoping through a little bit of confused process, a kind of sign of political stability should be established. That is probably the important step before any further economic policy actions to be taken," Ogata told Reuters on Monday.
The yen slipped broadly on Monday as investors braced for possible monetary easing by the Bank of Japan to help curb the yen's strength against the dollar.
The yen came under pressure after the BOJ called an emergency policy meeting.
Sources familiar with the BOJ's thinking have said the most likely easing option the BOJ may consider is to expand a cheap fixed-rate loan programme for banks, although any such move is already widely expected and may not weaken the yen for long.
The yen's rise to a 15-year peak against the dollar last week slammed Tokyo shares and threatened to add to deflationary pressure on Japan's economy, stirring market speculation about BOJ monetary easing as well as yen-selling intervention by Japanese authorities.
The dollar hit an intraday high of 85.75 yen on trading platform EBS on news of the BOJ's emergency meeting, rising from around 85.35 yen.
But it later trimmed some of its gains to stand at 85.59 yen up 0.4 percent from late U.S. trading on Friday. The dollar hit a 15-year low of 83.58 yen last week.
The euro rose 0.4 percent against the yen to 109.15 yen, having pulled up from a nine-year low of 105.44 yen struck last week.
Against the dollar, the euro dipped 0.1 percent to $1.2753.
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