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Nikkei higher on lower Yen

Wednesday, February 06 07:44:36

Japan's Nikkei average surged 3.8 percent to close at its highest since October 2008, after the yen fell sharply on bets the early exit of the central bank governor opens the way for one who pursues aggressive monetary easing.

The benchmark packed on 416.83 points to 11,463.75, producing its biggest one-day gain since March 2011, as the Japanese currency hit a fresh low of 94.08 against the dollar.

Wednesday's Bank of Japan Governor Masaaki Shirakawa said he would step down, together with his two deputies, three weeks before the end of his five-year term in April.

Prime Minister Shinzo Abe has put the central bank under relentless pressure to do more to pull the economy out of the doldrums. He has made it clear that he wants a governor who will be bolder in loosening monetary policy.

"There was a very aggressive, solid weakening of the yen in response to what seems like relatively trivial news. But it's nonetheless news that signals the expectation and recognition that the momentum in Japan is continuing to favour yen weakening and risk-on mood," said Stefan Worrall, director of equity sales at Credit Suisse in Tokyo.

While investors have been gunning for exporters over the past 2-1/2 months as the yen has slid 15.5 percent against the dollar, Worrall said there were other benefits to a more competitive exchange rate. ( C) Reuters