Japan stocks jump on BOJ candidate speculation

Feb 25, 2013, 12:30 AM EST
A man looks at an electronic stock board of a securities firm in Tokyo, Monday, Feb. 25, 2013.
(AP Photo/Koji Sasahara)

HONG KONG (AP) — Japanese stocks led Asian markets higher Monday, jumping on a report that the prime minister's pick for the next central bank governor will be a strong advocate of loose monetary policy aimed at reviving the moribund economy.

The benchmark Nikkei 225 gained 2 percent to 11,612.22 and the yen dropped against the dollar after Kyodo News, citing several unnamed government sources, reported that Prime Minister Shinzo Abe is preparing to nominate Haruhiko Kuroda as the next governor of the Bank of Japan.

Other Asian markets were more subdued. Hong Kong's Hang Seng was nearly unchanged at 22,783.71 and South Korea's Kospi was down 0.2 percent at 2,015.66.

Australia's S&P ASX 200 rose 0.7 percent to 5,051.40. Benchmarks in Taiwan, Singapore and New Zealand also rose.

Mainland Chinese stocks pared their gains, with the Shanghai Composite Index up 0.3 percent to 2,321.12 and the smaller Shenzhen Composite Index rising 0.3 percent to 950.60, after a survey showed manufacturing activity declined.

Kuroda is an Oxford-educated former vice minister of finance who is currently president of the Asian Development Bank. He is known as an advocate of aggressive monetary easing to overcome chronic deflation favored by Abe to boost the country out of its economic slump, the Japanese news agency said.

"The market has become very excited over this news as he will be a market friendly choice," Chris Weston of IG Markets wrote in a commentary. Abe was expected to announce the plan later Monday, said reports by NHK television and major newspapers, including the Nikkei, or Nihon Keizai Shimbun, Japan's leading financial newspaper.

The dollar strengthened to 94.07 Japanese yen from 93.42 in late trading Friday, as the Japanese currency sinks to its lowest in more than 2 ½ years.

Japan's government wants to boost inflation to pull the economy out of its two-decade stagnation, and investors believe that will result in a weaker yen, which would boost the country's exporters and also put upward pressure on prices. In other currency trading, the euro edged up to $1.319 from$1.318.

Investors elsewhere were treading carefully ahead of a slew of major political and economic events with market-moving implications.

"We are waiting for a lot of things to happen this week," said Jackson Wong, a vice president at Tanrich Securities in Hong Kong. They include Italian election results expected by Tuesday that will have a big impact on the European financial crisis, a Friday deadline for U.S. spending cuts and a meeting in Beijing next week that will complete a Chinese political transition begun last year and reveal clues about policy direction.

"So the turnover or sentiment is still pretty cautious," Wong said.

In energy markets, benchmark crude for April delivery was down 4 cents to $93.09 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose 29 cents to $93.13 on Friday.