Japanese stocks advanced for the first time in three days after the government sold yen, boosting prospects for exporters earnings.

The Nikkei 225 Stock Average gained 1 percent to 9,733.10 as of 12:42 p.m. in Tokyo, after falling as much as 0.2 percent. The broader Topix index climbed 0.9 percent to 833.88. The gains were maintained on optimism the yen may weaken further should the Bank of Japan follow its Swiss counterpart and take further measures.

The stock market is reacting to the yen’s depreciation, the yen may continue to weaken “if the Bank of Japan also takes some easing measures along with other countries.

Japan’s central bank may follow the unilateral action to sell the yen with monetary stimulus.

The yen dropped against all 16 of its major counterparts, falling to 79.15 against the dollar, the lowest level since July 20, compared with 77.15 at the close of stock trading in Tokyo yesterday. Against the euro, the yen slipped to 113.09 from 109.65. A weaker yen boosts the value of overseas income at Japanese companies when converted into their home currency.

Exporters advanced on easing concerns the yen, which had approached a postwar high against the dollar, will hurt overseas earnings. Canon rallied 2.3 percent to 3,775 yen. Ricoh Co., an office-equipment maker which derives more than half of its revenue outside Japan, climbed 2.2 percent to 807 yen. Toyota Motor Corp. (7203), the world’s largest carmaker, advanced 2.2 percent to 3,190 yen.


Swiss Action

Switzerland, also contending with a stronger currency, unexpectedly cut interest rates and pledged to boost the supply of the franc yesterday.

In the U.S., the Standard & Poor’s 500 Index advanced 0.5 percent to 1,260.34 yesterday, snapping a seven-day decline, amid speculation the Federal Reserve may consider another economic stimulus program to prevent a recession.

The Wall Street Journal reported three former top officials at the Fed said the central bank should consider a new round of securities purchases to bolster economic growth. (Bloomberg)
Yen Plunges

The BOJ will likely expand an asset-purchase program that was first set up last year and aimed to counter Japan’s trenchant deflation.

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(Reuters) - The dollar dropped against the yen and Swiss franc on Friday as dour U.S. jobs data strengthened expectations the Federal Reserve will leave interest rates low well into next year, prompting investors to embrace alternate safe-havens.


U.S. employment growth ground to a halt in June, the U.S. Labor Department said, with employers hiring the fewest workers in nine months, dampening hopes the economy was on the cusp of regaining momentum after stumbling in recent months.

The euro hit a session low of $1.4204 on Reuters data as markets became wary of taking on riskier assets following the jobs report. But it then trimmed losses, with traders saying the sharp drop toward the $1.42 level triggered short-term buying.

It last traded at $1.4258, down 0.7 percent on the day. At current prices the euro is down 1.8 percent against the dollar this week.
The report showed nonfarm payrolls rose only 18,000, well below economists' expectations for a 90,000 rise. The unemployment rate, which the Federal Reserve considers too high, unexpectedly rose to 9.2 percent from 9.1 percent. Economists had expected no change in this gauge of labor slack.

The dour data caused U.S. short-term interest rate futures traders to bet the Federal Reserve will stay on hold until well into 2012.
The Fed last week ended its second round of quantitative easing, called QE2. The program, which entailed buying $600 billion in Treasuries securities, was negative for the dollar as it was tantamount to printing money.
The safe-haven Swiss franc and Japanese yen were the main beneficiaries as investors sought safety.

The dollar fell as low as 80.48 yen following the jobs data from 81.48 yen earlier. It was last down 0.7 percent at 80.64 yen. Against the franc, the greenback was last trading down 0.8 percent at 0.8372 francs.
The euro fell 1.4 percent to 115.02 yen and dropped 1.5 percent at 1.1942 francs.

While interest rate differentials continue to favor the euro and is a primary reason for its 6.7 percent gain against the dollar year-to-date, concerns about Europe's sovereign debt crisis are an obstacle. (Reuters)

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