Japan's Nikkei extends rally as other markets lag

AMSTERDAM -- Japan's Nikkei stock index hit a four-year high on Friday as investors cheered the central bank's new policies, but other world markets edged lower ahead of U.S. jobs data.

The Nikkei surged for a second straight day after The Bank of Japan's new governor, Haruhiko Kuroda, unveiled plans to pump huge amounts of money into the financial system to spur price rises, spending and borrowing in an economy that has stagnated for years.

The central bank said it wanted to double the money supply and achieve a 2 percent inflation target within about two years. Kuroda described the scale of monetary stimulus as "large beyond reason," but said the inflation target would remain out of reach if the central bank stuck to incremental steps.

"The size of monetary easing announced yesterday far exceeded expectations," said analysts at DBS Bank Ltd. in Singapore in a commentary.

The Nikkei 225 in Tokyo closed 1.6 percent higher at 12,833.64, its highest finish since Sept. 1, 2008. Earlier in the day it surged more than 3 percent, breaking the 13,000 level.

In other regions, attention was focused on U.S. jobs data expected before the start of trade in New York.

Britain's FTSE 100 fell 0.6 percent to 6,305.15. Germany's DAX slipped 0.2 percent to 7,799.77. And France's CAC lost 0.3 percent to3,715.45.

Wall Street also appeared headed for a lower opening ahead of the release of the U.S. government's employment report for March, which analysts forecast will show a net increase of 195,000 jobs. Dow Jones industrial futures fell 0.1 percent to 14,510. S&P 500 futures lost 0.2 percent to 1,551.30.

Stock markets in Asia outside of Japan also sagged.

Hong Kong's Hang Seng tumbled 2.7 percent to 21,726.90. Analysts said the fall reflected some nervousness about a recent outbreak of deadly bird flu in China. Six people have died and authorities have ordered the slaughter of all poultry at a Shanghai market where the virus was detected. The news hurt tourism and travel-related shares. Hong Kong-listed Air China plunged 9.8 percent and China Southern Airlines sank 8.5 percent.

South Korea's Kospi dropped 1.6 percent to 1,927.23, dragged down by political jitters over the latest tensions with Pyongyang. Australia's S&P/ASX 200 lost 0.5 percent to 4,891.40 as investors took profits after recent rallies

In Japan, the monetary easing measures pushed the yen sharply lower on Thursday, but it was stable overnight, with the dollar rising slightly to 96.20 yen from 96.13 yen late Thursday.

Mark Williams, chief Asia economist at Capital Economics, said that the Bank of Japan's credibility rests on the success of the new direction the bank is taking.

"Markets are giving it the benefit of the doubt for now. But if the broad monetary aggregates and inflation don't show signs of a shift, the new-found trust in the capacities of the BoJ will rapidly fade," Williams said in a written commentary.

Benchmark oil for May delivery was down 7 cents to $93.19 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell $1.19 to finish at $93.26 per barrel on the Nymex on Thursday.

The euro fell to $1.2925 from $1.2939 late Thursday in New York.

Source: http://www.miamiherald.com/2013/04/05/3324785/japans-nikkei-extends-rally-as.html

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