Japan stocks inch higher after move to weaken yen

[August 04, 2011]  SINGAPORE (AP) -- Japan's stock market inched higher Thursday after finance authorities intervened to stem the yen's export-sapping rise against the dollar. Other Asian markets were mostly lower while European stock opened higher.

In Europe, Germany's DAX rose 0.7 percent to 6,684.60 and the CAC-40 in France added 0.5 percent to 3,472.03. Britain's FTSE 100 fell 0.3 percent to 5,567.17. Wall Street was set for a muted open with Dow futures almost unchanged at 11,817.

Tokyo's Nikkei 225 index closed up 0.2 percent to 9,659.18 after the intervention to sell the yen and buy the dollar drove the greenback to near 80 yen Thursday from 76.99 late Wednesday.

Finance Minister Yoshihiko Noda said the intervention was taken because the strong yen could hurt the economy, which is reliant on exports, and slow Japan's efforts to recover from the March 11 earthquake and tsunami.

The dollar had fallen as low as 76.29 yen on Monday. It hit a record post-World War II low of 76.25 yen in the days following the March 11 earthquake and tsunami. A strong yen is painful for Japan because it reduces the value of foreign earnings for companies like Toyota Motor Corp. and Nintendo Co. and makes Japanese goods more expensive in overseas markets.

"The market is relieved that they aren't going to let the yen to continue strengthening," said David Cohen, an economist at consultancy Action Economics in Singapore. "I suspect they'll have to intervene again before it's over."

The intervention was coupled with monetary policy easing by the central bank's policy board, which met Thursday for a shortened one-day meeting. The Bank of Japan expanded an asset purchase program to 50 trillion yen ($638.3 billion) from 40 trillion yen. It also kept its key interest rate in a range of zero to 0.1 percent.

Elsewhere in Asia, Hong Kong's Hang Seng shed 0.5 percent to 21,884.74 while China's Shanghai Composite Index advanced 0.2 percent to 2,684.04.

South Korea's benchmark Kospi dropped 2.3 percent to 2,018.47. Australia, Singapore and India were also lower.

"Here in Asia the economic data has been mixed, but everybody is still holding their breath that global demand will hold up," Cohen said.

Global stocks have slumped this week amid investor concern U.S. economic growth is slowing sharply. On Wednesday, the Institute of Supply Management said its index measuring the service sector of the U.S. economy grew in July at the weakest pace in 17 months.

Investors will be closely watching Friday's U.S. jobs report for July. Economists expect that 90,000 jobs were created last month and that the unemployment rate was unchanged at 9.2 percent.

The Dow Jones industrial average finished Wednesday with a gain of 0.3 percent, to 11,896.44. The S&P 500 index rose 6.29, or 0.5 percent, to 1,260.34. The S&P had been down for seven straight days through Tuesday. It is up 0.2 percent for the year after being down 0.3 for the year on Tuesday. The Nasdaq composite added 23.83, or 0.9 percent, to 2,693.07.

Investors are also eyeing Europe's sovereign debt crisis. On Wednesday, Italian and Spanish bond yields surged to 14-year highs, a sign investors consider a default increasingly likely.

The euro fell to $1.4269 from $1.4365.

Benchmark oil for September delivery was down 30 cents to $91.63 a barrel in electronic trading on the New York Mercantile Exchange. Crude dropped $1.86 to settle at $91.93 on Wednesday.

[Associated Press; By ALEX KENNEDY]

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