Bank of Japan easing lifts shares

Thursday, 20 September 2012 00:00 - - {{hitsCtrl.values.hits}}

LONDON (Reuters): Shares rose on Wednesday and the yen fell to a one-month low after the Bank of Japan eased monetary policy, the latest central bank to offer stimulus to help the global economy find a firmer footing.

The BOJ said it would increase its asset buying and loan programme, currently its key monetary easing tool, by 10 trillion yen ($127billion) to 80 trillion yen.

The announcement came a month earlier than expected and followed a promise from the U.S. Federal Reserve to pump $40 billion a month into the economy until the jobs market improved and new plans from the European Central Bank to fight the region’s debt crisis.

The BOJ move lifted Japanese stocks to a four-month high and the feel-good factor carried into Europe where London, Paris and Frankfurt all opened higher after seeing falls earlier in the week. The MSCI index of global shares was up 0.25 percent at 0715 GMT.

“It is similar to the Fed effect. Global easing of policy is positive for the market especially for the equity market, but this is also interesting because it was sort of unexpected,” said Daiwa Securities economist Tobias Blattner.

The yen fell to a one-month low against the dollar and the euro edged up 0.13 percent to $1.3062 on improved risk sentiment although it was still trading nearly a full cent below a four-month high set on Monday.

With riskier assets looking more appealing against the backdrop of central bank stimulus, German bund futures were 6 ticks lower on the day at 139.19, while yields fell slightly on Italian and Spanish bonds.

Oil prices were firmer with Brent November crude up 55 cents to $112.58 a barrel, snapping two straight days of losses.