* BOJ surprises markets with aggressive easing measures
* Yen falls, world stocks rise
* Gold hits record high on long-term inflation concerns
* Aussie falls after RBA leaves rates unchanged
By Dominic Lau
LONDON, Oct 5 (Reuters) - The yen fell and world stocks rose
on Tuesday after the Bank of Japan's surprising and aggressive
action to pump more funds into the flagging economy, though gold
hit a record high on fears of long-term inflation.
The BOJ's measures -- cutting its overnight rate target to
virtually zero and pledging to buy 5 trillion yen ($60 billion)
worth of assets -- pushed up the Nikkei average <> to close
1.5 percent higher. []
The announcement came after Federal Reserve Chairman Ben
Bernanke said on Monday that more asset purchases could further
ease financial conditions. []
"A surprise move by the Bank of Japan shows the authorities
will be working hard to ensure a recovery will be supported,"
said Henk Potts, strategist at Barclays Wealth in London.
The dollar was up 0.1 percent at 83.40 yen <JPY=> after
climbing as high as 83.99 on the BOJ decision, but was down 0.5
percent against a basket of major currencies <.DXY> after
hitting an 8-1/2-month low.
The prospect of further quantitative easing from the Fed
also supported U.S. Treasury prices, and the benchmark 10-year
yields <US10YT=RR> were down 2 basis points to 2.4597 percent.
Central banks in Japan, the United States and Britain have
been under political pressure to do more to support economies
showing only tepid recovery from the worst recession in decades.
In Japan, slowing export growth, a surprise fall in factory
output and companies' worries about the strong yen have
strengthened the case for the BOJ to ease policy. Last month the
authorities intervened in the currency market to curb the yen's
strength.
The U.S. currency has fallen 10 percent this year against
the yen, which tends to strengthen when concerns mount over
global growth.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Global interest rates: http://link.reuters.com/wed86p
BOJ policy rate: http://link.reuters.com/syz76p
Yen - taking on the market: http://r.reuters.com/fac44p
BOJ balance sheet/JGB buying: http://link.reuters.com/ger94p
RBA rates and commodity index: http://link.reuters.com/byg86p
Chronology of BOJ policy moves: []
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
AUSSIE DOWN
The Australian dollar <AUD=> fell 0.9 percent to $0.9594
<AUD=> after its central bank left interest rates steady for a
fifth month, confounding expectations of a rise [].
Australian stocks <> eased 0.4 percent.
In Europe, the FTSEurofirst 300 <> index advanced 0.3
percent, also helped by a rise in British services activity.
Ireland's benchmark <.ISEQ> put on 0.6 percent, shrugging
off Moody's Investors Service's warning that it may cut the
country's credit rating again, citing the huge bill for cleaning
up its banks announced last week. []
U.S. stock index futures <SPc1> <DJc1> <NDc1> rose 0.2 to
0.3 percent, indicating a firmer start for Wall Street.
World stocks measured by the MSCI All-Country World Index
<.MIWD00000PUS> added 0.3 percent, while the Thomson Reuters
global equity index <.TRXFLDGLPU> fell 0.3 percent.
The euro <EUR=> rose 0.7 percent to $1.3782 and was up 0.8
percent at 114.92 yen <EURJPY=>. The single currency is
benefiting from a gradual withdrawal of liquidity support
measures by the European Central Bank, contrary to the BOJ and
the thinking of the Fed.
"It seems everyone is trying to stop their currency from
appreciating except Europe," Societe Generale currency
strategist Kit Juckes said.
Gold <XAU=> was pushed higher by concern about more monetary
easing and possibly higher long-term inflation, and hit a record
high at $1,328.05 an ounce. Oil prices <CLc1> rose 0.5 percent
to just below $82 a barrel.
(Additional reporting by Alex Richardson in Singapore, Joanne
Frearson and Jessica Mortimer in London; editing by Tim Pearce)
