Japan and the European Union are to hold a summit this month to formally launch negotiations on a huge free trade deal, a report said Sunday.

Japan's public pension fund, the world's largest, recorded investment gains of US$56 billion in October-December, its second best quarter on record, on the back of strong domestic equities, while the yen's fall helped boost the performance of foreign assets.

Japan's jobless rate edged down to 4.2 percent in January while the struggling economy remained mired in deflation, official data showed Friday.

Japan's parliament on Tuesday passed a US$142 billion extra budget that forms a key part of Prime Minister Shinzo Abe's efforts to tackle the deflation that has dogged the economy for years.

Japan's government will sell around a third of its stake in Japan Tobacco Inc., the world's No. 3 tobacco company, to raise about US$10.4 billion for reconstruction of areas devastated by a 2011 earthquake and tsunami.

The yen hit a 33-month low against the U.S. dollar on Monday as the likelihood of sharply easier monetary policy in Japan grew, while Italian stocks and bonds gained in anticipation of the results of national elections.

Asian Development Bank (ADB) President Haruhiko Kuroda is seen as the leading candidate to become Japan's next central bank governor, local media reported on Saturday.

Japan, China and South Korea ended preparatory talks in Tokyo Thursday about a possible free trade agreement, despite tensions about territorial disputes.

Japan logged its worst-ever monthly trade deficit in January despite an upturn in exports as the yen's recent sharp drop pushed fuel costs higher, official data showed Wednesday.

Japan and Kazakhstan have agreed rules on foreign investment, officials said, as Tokyo looks to shore up minerals and energy to feed its resource-hungry industry.