Japanese Stocks Jump on Bank Protection Move

Asian stock markets closed mostly lower Monday, but the Tokyo index rose following last week’s government decision to use public funds to support Japan’s weakened banks.

European stocks finished slightly higher in thin volume.

U.S. markets were closed for the Presidents Day holiday.

In Tokyo, the benchmark Nikkei average of 225 stocks rose 81.03 points, or 0.58%, closing at 14,054.72. The index had gained 21.29 points on Friday.

Investors in Japan were encouraged by the Bank of Japan’s announcement Friday that it would inject $66 billion into major banks in an attempt to prevent the country’s banking system from collapsing.

Stocks also got a boost after the central bank said Friday it was cutting a key interest rate.

The Bank of Japan lowered its target for overnight call money, the rate banks charge each other for unsecured short-term loans, to an all-time low of 0.15% from 0.25%.

Hong Kong stocks fell in a shortened session, with most investors sticking to the sidelines ahead of the Chinese New Year holiday this week, which will keep markets closed until Friday. The Hang Seng index fell 23.03 points, or 0.2%, to 9,402.39.

In other markets, the Sydney All Ordinaries index fell 0.4%, the Singapore Straits Times index rose 0.4%, and Thailand’s SET index fell 0.7%.

In Latin America, the Chilean peso fell to a record low on concern that falling exports will mean fewer dollars flowing into the country, prompting the central bank to defend the currency for the first time in five months.

Chile’s peso weakened 0.4% against the dollar to 497.30, as companies bought dollars to cover payments on foreign bonds and loans. It recovered from a low of 498.50 after the central bank intervened.

The central bank’s decision Friday to ease limits on how much private pension funds can invest abroad led traders to bet that the dollar will gain as fund managers buy U.S. currency to fund a push abroad, said Carlos Ruiz de Gamboa, vice president of international fixed income at Chase Manhattan Corp. in Chile.

“Most of the demand for dollars is internal,” said Ruiz de Gamboa.

The peso’s descent led the central bank to sell roughly $20 million of its $16 billion in reserves to shore up the currency, traders said.

The peso has weakened 5.5% this year as 12-year-low copper prices led traders to bet Chile will attract fewer dollars and have a wider-than-expected trade deficit.

Chile is the world’s largest copper producer, with the metal accounting for 36% of its export revenue.

In Europe, stocks closed generally higher but trading volumes were thin with U.S. markets closed.

In London, the Financial Times-Stock Exchange 100-share index was up 72.5 points, or 1.21%, at 6,023.2. Volume was 731.5 million shares, compared to 1.1 billion shares Friday.

In other European markets, the Paris CAC 40 rose 0.1%, the German DAX index fell 0.2%, and Madrid’s IBEX-35 index rose 1.7%.