European stocks stage recovery from Friday's selloff
The yen tumbled against the euro and the dollar on Monday as the Bank of Japan embarked on its massive stimulus drive, but weak U.S. jobs data and worries about Portugal weighed on other assets in Europe.
The euro climbed to a peak of 128.43 yen, its highest since January 2010, while the dollar gained 1 per cent to 98.54 yen after the BoJ was seen conducting its first bond purchases since announcing the new monetary easing steps last week.
Since new BoJ Governor Haruhiko Kuroda promised on Thursday to inject about $1.4 trillion into the economy in less than two years, the yen has fallen more than 6 percent against both the dollar and the euro and sent Japanese stocks higher.
Japan's Nikkei stock average jumped as much as 3.1 per cent on Monday to its highest since August 2008.
"The BoJ's bazooka has sparked the buying of Japanese stocks, especially domestic sectors like real estate," said Yasuo Sakuma, a portfolio manager at Bayview Asset Management.
The prospect of Japanese investors moving out of their domestic debt market due to the BoJ buying has boosted demand for higher-yielding Spanish and Italian debt, sending their yields down sharply.
But Portuguese bonds bucked the trend after a constitutional court on Friday rejected four out of nine austerity measures in the government's latest budget, undermining its efforts to meet the terms of a bailout deal.
Spanish 10-year bond yields dropped 11 basis points to their lowest since February 2012 at 4.67 per cent. Equivalent Italian bonds fell 12 basis points to 4.29 per cent. The Portuguese 10-year bond yield rose 11 basis points to 6.54 per cent.
Meanwhile European share markets were recovering from their one-month lows hit on Friday when disappointing U.S. jobs data sparked fears that recovery in the world's biggest economy was losing momentum.
The FTSEurofirst index of top European shares rose 0.3 per cent in early trade, with London's FTSE 100, Paris's CAC-40 and Frankfurt's DAX all 0.2 to 0.3 per cent higher.
U.S. stock futures were up 0.1 per cent to suggest a firm Wall Street open.
Copyright @ Thomson Reuters 2013
