Asian stocks rise but dollar falls

Japan's Nikkei index had soared more than three percent by the break as the BoJ held an emergency meeting in response to concerted government pressure to address the yen's continuing strength.

But the market ended 1.76 percent, or 158.20 points, higher at 9,149.26 as dealers were unimpressed with the bank's measures, while the dollar, which soared to 85.74 yen in the morning, slipped to 84.89 in the afternoon.

The dollar was also down from 85.19 yen in New York late Friday.

The Japanese unit was at 108.05 to the euro after rallying to 109.55 earlier.

Markets began the day on a high after Federal Reserve chief Ben Bernanke reassured the country that he was ready to step in if the U.S. recovery faltered, lifting hopes for the global outlook.

But the BoJ's policy measures took the steam out of the rally.

The central bank said Monday that it would offer around 10 trillion yen (US$118 billion) in six-month low interest loans in addition to the 20 trillion yen of an existing three-month loan program that started in December.

The move would help lower rates in the market place with a view to easing the yen's strength, said the bank, which also left its key interest rate unchanged at 0.1 percent.

But Susumu Kato, chief economist at Calyon Capital Markets Asia, told Dow Jones Newswires: “The market was expecting something more drastic, like monetary easing in quantitative terms.”

Later, the government announced plans aimed at kick-starting the Japanese economy.

Other regional markets were up after Bernanke's comments on the U.S. economy.

Hong Kong rose 0.68 percent, or 139.87 points, to 20,737.22 and Shanghai added 1.61 percent, or 41.92 points, to 2,652.66.

In Sydney the ASX 200 ended 1.89 percent, or 82.6 points, higher at 4,452.7 while Seoul closed up 1.77 percent, or 30.57 points, at 1,760.13.

Wall Street provided a strong cue, with the Dow jumping 1.65 percent after Bernanke's comments Friday that the Fed would take more “unconventional” steps to boost growth if the U.S. economic outlook “deteriorated significantly.”

He said the pace of recovery and employment was weaker than expected but added that prospects for growth picking up in 2011 appeared to “remain in place.”

“The tone (of Bernanke's comments) was he would do everything to support the U.S. economy, which potentially implies some quantitative easing,” Hamilton Hindin Greene Broker James Smalley in Wellington said.

He added that the markets had taken the statement “very well and that has flowed through into our market.”

The Fed chief was talking after the government slashed second quarter growth in the world's largest economy to 1.6 percent, sharply lower than the 2.4 percent projected earlier.

However, it was slightly better than the 1.4 percent forecast by economists.

Gold closed at US$1,236.30-US$1,237.30 an ounce, slightly up from Friday's closing price of US$1,236.00-US$1,237.00.

In other markets:

— Singapore closed 0.62 percent, or 18.32 points, higher at 2,957.06.

— Taipei rose 0.24 percent, or 18.29 points, to 7,741.20.

— Jakarta fell 0.17 percent, or 5.17 points, to 3,099.56.

— Kuala Lumpur closed up 0.81 percent, or 11.44 points, at 1,422.49.

— Wellington ended 0.98 percent, or 29.37 points, higher at 3,036.81.

— Bangkok rose 1.03 percent, or 9.28 points, to close at 909.65.

— Mumbai closed 0.19 percent, or 33.70 points, higher at 18,032.11.

— Manila was closed for a public holiday.

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