Nikkei edges up in choppy trade after Bernanke's dovish tilt; BOJ eyed

Wed Jul 10, 2013 9:26pm EDT

* Nikkei choppy after Fed chief's policy comments
    * Traders reassess Fed stimulus outlook
    * BOJ outcome in focus

    By Ayai Tomisawa
    TOKYO, July 11 (Reuters) - Japan's Nikkei share average
edged up on Thursday morning in choppy trade as the yen's rally
paused, with global markets caught wrong footed after U.S.
Federal Reserve chief Ben Bernanke said that ultra-easy monetary
policy would be needed for the foreseeable future.
    The dollar has been volatile on Thursday and last traded at
99.39 yen, rebounding from below 99 yen it traded earlier as
investors reassessed the risk of an early end to the Fed's
programme.
    The Nikkei turned up 0.2 percent to 14,451.89 in
mid-morning trade after opening 1.0 percent lower on the back of
the yen's initial surge.
    Bernanke said the U.S. central bank would continue to pursue
an accommodative monetary policy, as inflation remained low and
the unemployment rate might be understating the weakness of the
labour market. The comments prompted investors to cut long
dollar positions, sending U.S. Treasuries futures surging.      
    The Japanese market has recently seen volatile trading as
investors fretted about slowing growth in China and the prospect
of the Fed rolling back its stimulus later this year. 
    However, market participants said that investors are not
overly concerned on whether the Fed will taper its stimulus
because they have priced in such expectations on the back of the
recovering U.S. economy.
    Exporters were mixed amid choppiness in the dollar-yen. 
Toyota Motor Corp fell 0.5 percent, Toshiba Corp
 dropped 1.5 percent, while Nissan Motor Co 
rose 0.4 percent.
    "We already know that the Fed will scale back its stimulus
at some point as the U.S. economy is recovering, so that's not
the main concern for the Japanese market," said Hiroichi Nishi,
an assistant general manager at SMBC Nikko Securities.
"Investors are now more sensitive to the yen's levels as the
market's focus has shifted to evaluating companies' earnings."
    With the April-June earnings season just around the corner,
people are focused on whether companies have benefited from the
yen's fall to multi-year lows on the government's fiscal and
monetary expansionary policies, he said.
    The Topix was flat at 1,194.93. 
    "Those who had expected that the Fed's tapering could start
as early as September were relived that it would come later than
that," said Kyoya Okazawa, head of global equities at BNP
Paribas. "Bernanke has done a good job in 'controlling markets
expectations.' He has made it clear that the Fed will scale back
its stimulus eventually, but has soothed tension by blurring the
timing of the tapering."
    The Bank of Japan, which concludes its monthly two-day 
board meeting later in the day, is set to keep policy steady.
The BOJ is expected to upgrade its view of the economy on
expectations that a weak yen and its massive monetary stimulus
already in place will be enough to offset the hit from slowing
Chinese growth.
   The Nikkei is up nearly 40 percent this year, underpinned by
the Japanese government's sweeping stimulus policies.