A passer-by walks past an electronic stock board in downtown Tokyo Friday, Oct. 10, 2008. Japanese shares nose-dived more than 10 percent in morning trade Friday as panicked investors dumped stocks following massive overnight losses on Wall Street and on growing fears over a global recession. The benchmark Nikkei 225 index lost 974.12 points, or 10.64 percent, to close the morning session at 8,183.37. (AP Photo/Itsuo Inouye)
The Nikkei share average climbed as much as 3.1 percent to hover near a 5-year high on Monday (April 8), and bond prices inched up as investors responded positively to the Bank of Japan's move to begin buying longer-dated bonds immediately to combat deflation.
The central bank conducted its first government bond buying operations on Monday and said it will buy 1 trillion yen of JGBs with maturities of between five and 10 years, and 200 billion yen of bonds with maturities exceeding 10 years.
Japanese government bond prices edged higher, although trading was less volatile than on Friday when investors pocketed some of the sharp gains, a day after the central bank announced its sweeping monetary stimulus measures to revive the world's third-largest economy.
The Nikkei was up 2.3 percent at 13,127.65 in late morning trade, after earlier rising to 13,225.22, levels last tracked in August 2008. The market shrugged off a weaker-than-expected U.S. jobs report that raised concerns that the recovery in the world's largest economy may be losing steam.
Real estate companies gained 4.3 percent, outpacing the broader market once again after jumping nearly 12 percent on Friday.
The sector has surged nearly 110 percent since mid-November, when Prime Minister Shinzo Abe unveiled in his election campaign bold expansionary fiscal and monetary policies to revive the world's third-largest economy. That compares with a 51 percent rally in the benchmark Nikkei during the same period.
Yields on Japanese government bonds slipped as the BOJ started its stimulus operations. The 10-year fell 4 basis points to 0.490 percent, after it swung violently from a record low of 0.315 percent to a three-week high of 0.600 percent in Friday's trading.
The BOJ's massive stimulus steps promise to inject 1.4 trillion U.S. dollars into the economy in less than two years by buying government bonds across the yield curve as well as riskier exchange-traded funds.
One of the BOJ's aims is to drive long-term interest rates lower in the hope that Japanese companies will increase their investments and households will raise their spending.
But credit ratings agency Moody's Investors Service said the central bank's effort merely buys time for the government to implement a credible structural reform and fiscal consolidation plan.