GLOBAL MARKETS-Yen slumps on BOJ easing, Wall Street shares firmer

Thu Apr 4, 2013 4:34pm EDT

* Yen sinks 3.3 pct vs U.S. dollar on bold Bank of Japan
easing
    * Dow, S&P 500 advance, but European shares drop sharply
    * Oil falls on U.S. new jobless claims, safe-haven bonds
rally


    By Herbert Lash
    NEW YORK, April 4 (Reuters) - The yen slumped on Thursday
after the Bank of Japan unveiled a bold plan to pump money into
the economy, while U.S. stocks gained on investor optimism that
expansionary central bank policies would remain supportive for
equities.
    The BOJ surprised markets when it unleashed the world's most
intense burst of monetary stimulus, planning to nearly double
the monetary base to 270 trillion yen ($2.9 trillion) by the end
of 2014, in a shock therapy to end two decades of stagnation.
    The U.S. dollar and euro soared more than 3.0 percent
against the yen in their biggest one-day moves since 2008 after
the BoJ took the action to fight deflation.
    "The Japanese news was significant to show that there is
going to continue to be, on a global basis, easy money, which
supports stocks," said Rick Meckler, president of hedge fund
LibertyView Capital Management LLC in Jersey City, New Jersey.
    The dollar rose as high as 96.41 yen, approaching a
3-1/2-year peak of 96.71 set on March 12. It was last trading at
96.29 yen, up 3.5 percent on the day and on track for its best
day since October 2008. 
    The euro soared 4.2 percent to 124.52 yen, the
biggest one-day move since November 2008.
    The Dow Jones industrial average closed up 55.76
points, or 0.38 percent, at 14,606.11. The Standard & Poor's 500
Index ended up 6.29 points, or 0.40 percent, at 1,559.98.
The Nasdaq Composite Index was up 6.38 points, or 0.20
percent, at 3,224.98. 
    Advancing volume was more than double declining volume on
both the New York Stock Exchange and Nasdaq Stock Market. 
    However, a U.S. Labor Department report showing the number
of Americans filing new claims for unemployment benefits hit a
four-month high last week caused some concern about the strength
of recovery in employment in March. 
    Investors are skittish after several weak readings on the
economy this week, said Jack DeGan, chief investment officer of
Harbor Advisory. 
    "There is a fear of this being the start of a 'spring
swoon'," DeGan said. "I don't think that is the case, but until
we get a couple of real inputs that the economy is improving,
the rally is likely to stall considering how far we've come this
year."
    The S&P 500 index, a benchmark for the U.S. stock market, is
up 9.4 percent so far this year.
    On Wednesday, data on U.S. private-sector hiring
disappointed, spurring concerns about Friday's government
payrolls report, which is expected to show that 200,000 jobs
were added in March. 
    Peter Cardillo, chief market economist at Rockwell Global
Capital in New York, said the rise in jobless claims indicated
the sequester was taking a toll on the labor market.
    "The economy is slowing, the job market is slowing, and the
Fed is not changing its policy," Cardillo said.
    Initial claims for state unemployment benefits increased
28,000 to a seasonally adjusted 385,000 last week, the highest
level since November, the Labor Department said.
    European shares fell sharply as traders, unhappy at the lack
of fresh economic stimulus measures from the European Central
Bank at the close of its policy meeting on Thursday, took
profits on recent sectoral outperformers.
    The ECB kept its interest rates on hold and did not unveil
any new initiative, such as special credit schemes for small
enterprises, which some traders had been hoping for after recent
weak economic data. 
    The pan-European FTSEurofirst 300 index extended
losses after ECB President Mario Draghi spoke in the afternoon,
to end 1.1 percent lower at 1,180.65.
    MSCI's world equity index slipped 0.15
percent to 357.12 after paring some of its earlier losses.
    U.S. Treasury debt prices rose, pushing yields to near
3-1/2-month lows, after the jobless claims data suggested that
the government's monthly employment report due out on Friday
could show the labor market lost some steam in March, an outcome
that would favor safe-haven U.S. debt.
    The benchmark 10-year U.S. Treasury note was up
15/32 in price to yield 1.7643 percent.
    Crude oil futures dropped as the increase in U.S. claims for
unemployment benefits heightened concerns about economic growth
in the world's top oil consumer.
    Brent futures for May delivery fell 77 cents to
settle at $106.34 a barrel.
    U.S. crude slumped $1.19 to settle at $93.26 a
barrel.
    Spot gold prices fell $3.68 to $1,553.60 an ounce. 
    U.S. Comex gold for June delivery settled down $1.10
at $1,552.40.
A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

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