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Updated: March 17, 2010 14:50 IST

Japan’s Nikkei rises to eight-week high

AP
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A passer-by looks at the electronic stock board of a securities firm in Tokyo. File photo: AP.
A passer-by looks at the electronic stock board of a securities firm in Tokyo. File photo: AP.

Japan’s Nikkei stock index rebounded to an eight—week high on Wednesday as investors took heart from further monetary easing steps by the nation’s central bank.

The benchmark Nikkei 225 stock index rose 125.27 points, or 1.2 percent, to 10,846.98, the highest finish since Jan. 21. The broader Topix index gained 1 percent to 947.43.

“While the bank’s move was widely expected, it heartened investors as it shows the Bank of Japan’s action and resolve to tackle deflation and support the economy,” said Yutaka Miura, senior strategist at Mizuho Securities Co. Ltd.

The Bank of Japan voted on Wednesday to double the amount available under its short—term lending programme to 20 trillion yen ($221 billion) from 10 trillion yen. Introduced in December, the three—month loans at a fixed rate of 0.1 percent are intended to boost liquidity and lower longer—term interest rates.

The bank’s move came amid growing government pressure to take stronger action to combat falling prices, which threaten to undermine Japan’s fragile economic recovery.

Investors were also hopeful that fresh monetary easing steps could help the yen weaken and support Japanese exporters, Mr. Miura said.

A weak yen helps exporters as it boosts the value of their repatriated profits, and makes their goods more competitive by price abroad. Exports are a silver lining for Japan’s economic recovery, which remains threatened by deflation, a strong yen and sluggish domestic demand.

Among blue chips, Toyota Motor Corp. rose 0.8 percent to 3,580 yen.

Honda Motor Co. edged up 0.2 percent to 3,250 yen. Nissan Motor Co. jumped 2.5 percent to 774 yen.

In currencies, the dollar rose to 90.46 yen from 90.22 yen in New York late Tuesday. The euro gained to $1.3794 from $1.3769.

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