Japan's Nikkei higher on G7 currency pledge

AP News
Posted: Mar 17, 2011 10:38 PM
Japan's Nikkei higher on G7 currency pledge

Japan's stocks posted solid morning gains Friday after the Group of Seven major industrial nations agreed to intervene in currency markets to help the earthquake-stricken nation.

The benchmark Nikkei 225 rose 1.8 percent, or 158.26 points, to 9,120.93. While the G-7 did not say what it would do, the implication is that actions were under way to ensure the yen does not spiral upward.

The Kyodo News agency said Japan's government intervened in currency markets after the G7 statement but there was no immediate official confirmation of that.

A stronger yen hurts Japan's powerhouse export sector _ potentially dealing another problem to an economy already wracked by an earthquake, tsunami and evolving nuclear crisis.

The G-7 pledge adds to a flurry of moves by Japan to calm roiled financial markets following the 9.0-magnitude quake and tsunami on March 11. The Bank of Japan injected an additional 6 trillion yen ($76.7 billion) in same-day funds Thursday that banks can access immediately. From Monday to Wednesday, the central bank's emergency funding totaled 55.6 trillion yen ($688.3 billion).

In Asia on Friday, the yen had dropped to 81.40. It had traded at 78.97 to the dollar Thursday afternoon after hitting a historic low of 76.53 yen to the dollar late Wednesday.

The yen's strength in the wake of the disaster has been attributed to investors expecting the Japanese to repatriate funds from overseas to pay reconstruction costs _ or in the case of insurance companies, to pay claims for the massive loss of property and life. But analysts also said they believed currency speculators had contributed to the yen's rise.

Other major Asian indexes also opened higher. Hong Kong's Hang Seng index rose 0.4 percent to 2,377.63 and South Korea's Kospi was up 0.9 percent to 1,976.02.

In New York on Thursday, stocks rose broadly on signs that the U.S. economy is improving.

A gauge of manufacturing in the mid-Atlantic region jumped in February to the highest point since January 1984. The survey from the Federal Reserve's Philadelphia branch showed new orders soared. Production at U.S. factories, mines and utilities dipped last month but was actually higher in previous months than first estimated, according to the Federal Reserve.

The Labor Department reported that the number of people applying for unemployment benefits fell more than economists expected last week. Ongoing claims dropped to the lowest level since October 2008.

The Standard & Poor's 500 rose 16.84, or 1.3 percent, to 1,273.72. The Dow gained 161.29 points, or 1.4 percent, to 11,774.59. The Nasdaq rose 19.23, or 0.7 percent, to 2,636.05. The technology-heavy index is down 0.6 percent for the year.