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May 27, 2017

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Japan leads Asian stocks higher on BOJ measures

MUMBAI/HONG KONG--Japan led Asian stock markets higher Tuesday after the country's central bank announced new measures to support growth. European markets were lower.

The Nikkei 225 in Tokyo vaulted 3.1 percent to 14,843.24 after the Bank of Japan topped up its already lavish monetary stimulus. It said it was doubling the size of its fund to support bank lending and its fund to support economic growth. The funds, which were due to expire shortly, were extended for another year.

The BOJ moves come after fourth quarter economic growth fell short of forecasts despite massive fiscal and monetary stimulus intended to engineer a recovery.

European stocks were lower as traders awaited German investor confidence data.

Germany's DAX slipped 0.1 percent to 9,649.14 and Britain's FTSE 100 lost 0.2 percent to 6,726.14. France's CAC 40 was down 0.3 percent to 4,321.94.

Futures augured little movement on Wall Street, which reopens Tuesday after the President's Day holiday. Dow and S&P 500 futures were both up 0.1 percent.

After a day of gains, Asia's markets had no cues from Wall Street which was closed for the Presidents' Day holiday.

Seoul was flat, edging up 0.03 percent, or 0.55 points, to 1,946.91 and Sydney gained 0.18 percent, or 9.9 points, to 5,292.8.

Shanghai fell on profit-taking, losing 0.77 percent, or 16.35 points, to end at 2,119.07, while Hong Kong edged up 0.23 percent, with the benchmark Hang Seng index adding 51.78 points to 22,587.72.

The Shenzhen Composite Index, which tracks stocks on China's second exchange, slipped 0.41 percent, or 4.77 points, to 1,155.62.

"The (China) market may resume its uptrend in the coming sessions as there's ample liquidity ... we are unlikely to see an inflow of IPOs (initial public offerings) until March," Capital Securities analyst Amy Lin told Dow Jones Newswires.

Investors were earlier gripped by worries over tight liquidity conditions as a flood of IPOs in January diverted funds from the secondary market.

All eyes were on the Bank of Japan's governor Haruhiko Kuroda's post-meeting comments for signs of future policy moves, after weak Japanese growth data for the final quarter of 2013 worsened fears about the impact of an April sales tax rise.

While the world's number three economy grew 1.6 percent over 2013 — its best performance in three years — it slowed to 0.3 percent in the October-December quarter, presenting a major challenge for Prime Minister Shinzo Abe's bid to kickstart growth after almost two decades of deflation.

The BoJ said it had decided to double the sum of loan schemes to banks in a bid to stimulate lending to firms and to finance growth-stoking projects such as environmental research and natural resources development.

Expanding the loans schemes was "nothing huge, but it is the first significant change of policy since the (Bank of Japan) started on its massive easing cycle last April," said Chris Tedder, research analyst at in Sydney.

Gold fetched US$1,315.44 an ounce at 1100 GMT from US$1,325.30 late Monday.

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