Japan Leads Asian Markets Higher After BoJ Move

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(RTTNews.com) - Asian stocks held steady on Tuesday, although Chinese shares fell from two-month highs on liquidity worries. A weaker dollar, which languished at a six-week low against a basket of currencies, supported commodities as investors waited for Wall Street to resume trading after the annual Presidents' Day holiday.

Japan's Nikkei average jumped 450 points or 3.1 percent to finish at 14,843, after the Bank of Japan kept its monetary easing plan unchanged but doubled a funding tool to 7 trillion yen to stimulate bank lending. The revision allows financial institutions to borrow funds from the central bank up to an amount that is twice as much as the net increase in their lending. At the end of its two-day meeting of the Policy Board, the BoJ maintained its upbeat economic assessment despite recent signs of slower growth. The broader Topix index advanced 2.7 percent.

Among the prominent gainers, Sumitomo Mitsui Financial Group, Mitsubishi UFJ Financial Group, Daikin Industries, Central Japan Railways and Mitsui Mining & Smelting soared 5-6 percent. Heavyweight Fast Retailing rallied 4.4 percent, Fanuc added 3.2 percent and SoftBank Corp advanced 4 percent. The yen fell against most of its major peers, lifting export-oriented stocks.

Automakers Honda Motor, Nissan and Toyota Motor rose about 2 percent each and Mazda Motor climbed 4.4 percent, while Canon, Fujitsu, Panasonic, Hitachi, Kyocera and Sony gained 2-4 percent. Renesas Electronics soared 8.6 percent on a Nikkei report that it plans to start mass production of high-performance chips for cars as early as this year. Konami Corp. shares rallied 7.2 percent on a brokerage upgrade.

Chinese shares fell sharply, retreating from a two-month high reached yesterday, after the People's Bank of China drained 48 billion yuan ($7.92 billion) from the financial system by issuing 14-day bond repurchase agreements for the first time since June. The move comes after recent data showed loans extended by Chinese banks surged to their highest level in four years in January.

The benchmark Shanghai Composite index dropped 0.8 percent to finish at 2,119. Hong Kong's Hang Seng index, however, closed 0.2 percent higher at 22,588, a three-week high. Commerce Ministry data showed today that China drew $10.76 billion in foreign direct investment (FDI) in January, up 16.1 percent from a year earlier despite a slight economic slowdown seen during the final quarter of 2013. The double-digit growth comes after a 3.3 percent rise in December.

Australian shares posted modest gains, with upbeat results from global miner BHP Billiton supporting broader market sentiment. The benchmark S&P/ASX 200 index gained 0.2 percent to finish at 5,393, its highest level since November 15. Shares of BHP Billiton climbed 2.3 percent. The Anglo-Australian mining giant increased its interim dividend and proposed to consider a share buyback in August after reporting an 83 percent jump in first-half profit. Rival Rio Tinto added 1.9 percent and Fortescue Metals Group rallied 2.8 percent.

Among the major banks, ANZ edged up marginally, Commonwealth rose 0.2 percent and NAB advanced 0.8 percent, while Westpac slid 0.2 percent. Monadelphous Group soared 9.7 percent and Macmahon Holdings jumped 12 percent after posting strong half-yearly results, while shares of Amcor, which reported a steep decline in interim earnings pursuant to the demerger of its Australasian and packaging distribution operations, retreated 4.2 percent.

Coca-Cola Amatil shares slumped 5.3 percent after the company posted its lowest annual profit in 21 years, hit by hefty write-downs at its fruit cannery division SPC Ardmona. Shares in Pacific Brands tumbled 9 percent as the troubled clothing manufacturer posted a First-half net loss of $219 million due to restructuring costs.

In economic news, minutes of the Reserve Bank of Australia'sFebruary 4 meeting revealed that interest rates will likely remain on hold for the rest of the year. While retaining the benchmark cash rate at a record low of 2.5 percent, the board members felt that it was appropriate to allow time for the stimulus already in place to take full effect. The central bank expects inflation to be somewhat higher than forecast three months ago, but still consistent with the 2-3 percent target over the next two years.

Seoul shares ended a volatile session largely unchanged. The benchmark Kospi average recouped early losses to end up 0.03 percent at 1,947 after the Bank of Japan expanded two lending programs in order to support the economy. Closer home, producer prices in South Korea rose 0.2 percent in January from the previous month, unchanged from the December reading, the Bank of Korea said.

New Zealand's benchmark NZX 50 index finished flat at 4,895 as investors awaited more earnings reports for direction. Exporter Fisher & Paykel Healthcare rallied 3.5 percent as the firm raised its full-year profit guidance for a second time and unveiled expansion plans.

Trade Me edged up 0.3 percent ahead of its earnings announcement on Wednesday and Fletcher Building rose 0.6 percent ahead of its first-half results due on Thursday, while Contact Energy shed 0.4 percent. The utility reported first-half profit of $112 million, up 27 percent from the year-ago period, helped by lower generation costs and increased sales in the commercial and industrial business.

Elsewhere, India's Sensex was adding a percent and the Taiwan Weighted average rose 0.4 percent, while the key benchmark indexes in Indonesia, Malaysia and Singapore were little changed.

The European markets turned in a mixed performance on Monday as investors paused for breath after a two-week rally. While the German DAX and France's CAC 40 fell marginally, the U.K.'s FTSE 100 rallied 1.1 percent, led by gains in resource stocks, amid signs of progress in the euro zone and encouraging bank lending data out of China.

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