Japanese Stocks Jump on Bank Protection Move

Asian stock markets closed mostly lower Monday, but the Tokyo index rose both Monday and today, 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, Japanese stocks rose for a fourth day as the yen fell to a two-month low against the dollar and bonds rallied after Finance Minister Kiichi Miyazawa said the government will reduce issuance of 10-year bonds in an effort to bring down long-term interest rates.

That boosted currency-sensitive exporters including Honda Motor Corp. and Sony Corp. and futures contracts.

The benchmark Nikkei-225 average climbed 177.22 points, or 1.3%, to 14,231.94 today, after rising 81 points Monday. The broader Topix index of all shares on the Tokyo exchange’s first section gained 7.7 points, or 0.7%, to 1102.72.

Miyazawa said the government will cut its issuance of 10-year bonds next month by $3.42 billion and increase the amount of shorter-term debt by the same amount in an effort to bring down long-term interest rates.

Miyazawa also said he is satisfied with the current yen-dollar rate, adding that further weakening of the yen would be acceptable.

The dollar rose against the yen earlier in the morning after Vice Finance Minister for International Affairs Eisuke Sakakibara welcomed the weakening of the yen following Friday’s easing of monetary policy by the Bank of Japan.

Hong Kong stocks fell in a shortened session Monday, 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, pushed down by concern that falling exports will mean fewer dollars flowing into the country, prompting the central bank to step in to defend the currency for the first time in five months.

Chile’s peso weakened 0.4% against the dollar to 497.30.

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.

The peso has weakened 5.5% this year along with copper prices, now at a 12-year-low. Chile is the world’s largest copper producer.

In Europe, stocks closed generally higher, but trading volumes were thin.

In London, the Financial Times Stock Exchange 100-share index was up 72.5 points, or 1.21%, at 6,023.2.

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%.