Tokyo stocks rebounded Monday, with a weak yen lifting export-related shares, while long-term government bond yields hit a nine-year high after the Bank of Japan decided to tweak its ultraloose monetary policy last week.
The yield on 10-year Japanese government bond temporarily rose to 0.605 percent, the highest level since June 2014, following the BOJ decision Friday allowing the long-term yield to rise above its 0.5 percent cap toward 1.0 percent. It closed at 0.600 percent, up 0.055 percentage point from Friday's close.
The 225-issue Nikkei Stock Average ended up 412.99 points, or 1.26 percent, from Friday at 33,172.22. The broader Topix index finished 31.95 points, or 1.39 percent, higher at 2,322.56.
Gainers were led by precision instrument, transportation equipment, and iron and steel shares.
The U.S. dollar topped the 142 yen line in Tokyo as investors interpreted the BOJ's monetary policy adjustment as only minor, dealers said. On Friday, the U.S. currency hit a low of 138.06 yen after the BOJ's policy meeting.
At 5 p.m., the U.S. dollar fetched 142.17-18 yen compared with 141.13-23 yen in New York and 139.75-78 yen in Tokyo at 5 p.m. Friday.
The euro was quoted at $1.1019-1021 and 156.66-70 yen against $1.1010-1020 and 155.50-60 yen in New York, and $1.0952-0953 and 153.07-11 yen in Tokyo late Friday afternoon.
The Nikkei index briefly surged over 600 points, hitting its highest intraday level in about a month, after U.S. shares rose Friday as wariness over further interest rate hikes by the Federal Reserve receded following economic data showing inflation was slowing, analysts said.
The benchmark index was further lifted by the yen's weakness against the dollar, which analysts said stabilized after a brief slide following the BOJ's announcement.
After a spike in government bond yields, the central bank announced a special open market operation to buy 300 billion yen worth of Japanese government bonds, the first such purchase since Feb. 22.
At a press conference Friday, BOJ Governor Kazuo Ueda said there is some "distance" to achieving the bank's 2 percent inflation target stably, and that it took the latest step to ensure the sustainability of monetary easing.
His remarks "made it clear that the direction of the central bank's policy will not change," said Chihiro Ota, assistant general manager of investment research and investor services at SMBC Nikko Securities Inc., adding the comments brought relief to investors who had been speculating about a major change.
In the afternoon, stocks trimmed some gains following a decline in U.S. futures, analysts said.
Going forward, "movements will be defined by U.S. stocks and the dollar versus the yen," said Yutaka Miura, senior technical analyst at Mizuho Securities Co.
The yen's depreciation increases the overseas profits of Japanese companies when repatriated, boosting buying of exporter issues.
Among export-oriented shares, Toyota Motor rose 76 yen, or 3.3 percent, to 2,386.0 yen, while Honda Motor advanced 113 yen, or 2.6 percent, to 4,513 yen.
Semiconductor-related shares also saw gains tracking their U.S. counterparts. Tokyo Electron, a maker of chip manufacturing equipment, was up 335 yen, or 1.6 percent, at 21,245 yen.
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