* BOJ stimulus hopes also help sentiment - traders
* Nikkei falls 1.1 pct for the week, 3rd weekly losses
* Nikkei's volatility index hits above 40
By Ayai Tomisawa
TOKYO, Jan 22 Japan's Nikkei share average
scored its biggest single-day gain in 4-1/2 months on Friday,
helped by a weaker yen, a bounce in oil prices and a hint of
more stimulus from ECB president Mario Draghi.
Also helping sentiment was speculation that the Bank Of
Japan may announce fresh stimulus measures at its policy meeting
The Nikkei share average ended 5.9 percent higher at
16,958.53, recouping most of its losses from the past two days.
Still, for the week the benchmark index shed 1.1 percent,
falling for a third week.
Traders said that foreign investors such as hedge funds and
oil funds, which had been heavily reducing risky assets
recently, bought back battered shares.
But they said it would be too hasty to assume that the
market has hit a bottom, and that volatility may persist for a
while. The Nikkei volatility index stayed above 40.
"It's good to see such rises today, but we shouldn't be
overjoyed," said Norihiro Fujito, senior investment strategist
at Mitsubishi UFJ Morgan Stanley Securities. "The market should
not forget what happened last September."
On Sept. 9, the Nikkei soared 7.7 percent on stimulus hopes,
but later that month slumped to a 8-month low on worries about
the slowing Chinese economy.
"The market is so volatile that it can turn around in the
opposite direction easily," Fujito said, adding that investors
are cautious ahead of major economic events next week.
The U.S. Federal Reserve will have a policy meeting on Jan.
26-27, while the BOJ's policy meeting is on Jan. 28-29.
Economists polled by Reuters expect more stimulus from the
BOJ in coming months, and a few traders believe it could move as
early as next week.
The BOJ is likely to cut its core consumer inflation
forecast for the coming fiscal year to possibly below 1 percent
at a policy review next week, say three sources familiar with
Separately, the Nikkei reported that Japan's central bank is
"taking a serious look" at expanding its monetary easing
measures as sliding oil prices make it harder to reach its 2
percent inflation target.
Oil prices rose for a second session on Friday, moving
further away from 12-year lows plumbed earlier this week,
lifting oil shares.
Inpex Corp soared 7.2 percent and Japan Petroleum
Exploration Co surged 5.5 percent.
Exporters were in demand, with Toyota Motor Corp
jumping 6.7 percent and Honda Motor Co surging 6.0
The broader Topix gained 5.6 percent to 1,374.19 and
the JPX-Nikkei Index 400 rose 5.6 percent to
(Editing by Kim Coghill)