Japan's Nikkei rockets to highest level in more than 4 yrs

TOKYO Wed Feb 6, 2013 12:44am EST

TOKYO Feb 6 (Reuters) - Tokyo's Nikkei average surged 4 percent to its highest level in more than four years on Wednesday, after the yen declined sharply on bets that a decision by the head of the Bank of Japan to step down early will bring forward aggressive monetary easing.

Hikes in profit forecasts from the likes of Toyota Motor Corp and Mitsubishi Heavy Machinery Ltd due to the weaker yen, which inflates the value of earnings garnered overseas, helped sustain the bullish mood.

The Nikkei climbed 432.78 points to 11,479.70, its highest level in 52 months and was on track for its biggest one-day percentage rise since March 2011.

The yen slumped to 94 yen against the dollar, a low not seen for 33 months.

Bank of Japan Governor Masaaki Shirakawa said on Tuesday he would step down together with his two deputies, three weeks before the end of his five-year term.

Prime Minister Shinzo Abe has put the central bank under relentless pressure to do more to pull the economy out of the doldrums and made it clear that he wants a governor who will be bolder in loosening monetary policy.

"It was a very aggressive, solid weakening of the yen to what seems like relatively trivial news, but nonetheless news that signals the expectation and recognition that the momentum is Japan is continuing to favour yen weakening and risk-on mood," said Stefan Worrall, director of cash equity sales at Credit Suisse in Tokyo.

Toyota jumped 6 percent and was the most-traded stock by turnover on the main board, while Mitsubishi Heavy soared over 12 percent.

Shares of companies that will benefit from a return to inflation, which Abe has made clear he wants the BOJ to achieve, were also in the spotlight, with the real estate sector advancing 4.7 percent.

The broader Topix jumped 3.4 percent to 971.94.

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