Tokyo stocks close up 0.98%
Wednesday, 31 October 2012
TOKYO: Tokyo stocks closed 0.98 percent higher on Wednesday as investors welcomed news of the Bank of Japan's latest monetary easing measures aimed at boosting the world's third-largest economy.
The benchmark Nikkei 225 index at the Tokyo Stock Exchange rallied 86.31 points to 8,928.29, while the broader Topix index of all first-section shares rose 1.21 percent, or 8.87 points, to 742.33.
The BoJ's 11 trillion yen ($138 billion) in fresh easing measures was announced just before the Tokyo market closed on Tuesday. The central bank also unveiled an "unlimited" loan programme to commercial banks in a bid to spur their lending to businesses and households.
The easing injects liquidity into markets through purchases of government and corporate bonds and commercial paper.
Investors welcomed the measures following similar moves by central bankers in the United States and Europe, although it remained to be seen whether the BoJ's latest plan would quicken the lumbering Japanese economy.
The effectiveness of the new lending programme hinged on the strength of demand for loans among companies and households, said Yoshihiro Okumura, general manager of research at Chibagin Asset Management.
"If there is no demand, it doesn't function," Okumura told Dow Jones Newswires.
However, the nation's companies continue securing big overseas deals on the back of a strong yen, including mobile carrier Softbank's recent announcement of a $20 billion takeover of US-based Sprint Nextel -- a deal largely financed by bank loans.
The Nikkei also got support from month-end buybacks, brokers said.
Heavily-weighted major exporters rose, with factory automation firm Fanuc rising 1.59 percent to 12,710 yen and Honda up 2.44 percent to 2,390.
Construction machinery maker Komatsu jumped 3.20 percent to 1,672 yen after saying its full-year profit forecast remained unchanged, despite a 30.2 percent drop in earnings for the first six months to September.
Japanese manufacturers with exposure to China, including Komatsu, have seen their bottom line hit by a diplomatic row over an East China Sea island chain that has prompted a consumer move away from Japan-brand products.
Hitachi rose 3.17 percent to 423 yen after it maintained its full-year profit forecast while announcing it would buy British atomic power venture Horizon to expand its nuclear business overseas. (AFP)