* Yen sinks 2.6 pct vs dollar on bold BoJ easing
* Gold hits 10-month low as dollar strengthens
* European shares, euro steady as ECB holds rates
* Oil recovers after sharp sell-off to be near $107/bbl
By Richard Hubbard
LONDON, April 4 The yen sank on Thursday after
the Bank of Japan unveiled a bold plan to pump money into the
economy, while Europe's main share indexes and the euro held
steady after the European Central Bank left policy unchanged.
The BoJ surprised markets with a radical overhaul of its
monetary policy framework, promising to inject about $1.4
trillion into the Japanese economy in less than two years as it
seeks to end nearly two decades of stagnation.
"The market expected some of these initiatives but not the
kind of scale they have delivered," said Daragh Maher, currency
strategist at HSBC.
The yen sank by 2.6 percent to around 95.45 yen to the
dollar - its biggest daily move since October 2011 - and
by 2.3 percent to about 122.30 to a euro. The falls
helped lift the dollar 0.8 percent against a basket of major
currencies to an eight-month high of 83.39.
As the dollar strengthened, gold fell 3.2 percent to
hit$1,546.35 an ounce and at one point touched $1,539.74 an
ounce, its lowest level since May 30.
"Further easing from the BOJ should ultimately be positive
for gold, but for now seems unable to match the combination of
poor sentiment and a firmer dollar," UBS analyst Joni Teves
The BoJ's moves also sent Japan's Nikkei stock average
up 2.2 percent, while the 10-year Japanese government
bond yield dropped to 0.425 percent, breaking its
previous record low of 0.43 percent hit in June 2003.
MSCI's world equity index slipped 0.2
percent although U.S. stock futures point to a firmer Wall
Street open, a day after the Standard & Poor's 500 Index
posted its biggest daily drop in over a month.
Markets showed little reaction to the widely expected
decision by the European Central Bank to leave its key interest
rates on hold.
The euro edged up marginally to around $1.2818 afterwards
from $1.2810 before the decision, though it was still
down 0.3 percent on the day.
The FTSEurofirst 300 index of top European shares
was also little changed after the decision while London's FTSE
100, Frankfurt's DAX and Paris's CAC-40
were between 0.4 percent lower and 0.75 percent up.
Investors were waiting for the regular news conference by
ECB President Mario Draghi to see if he will hint at any future
policy change after a run of weak data has thrown a spotlight on
the fragile state of the region's economy.
In initial comments, he said: "Weak economic activity has
extended into the early part of the year and a gradual recovery
is projected for the second half of this year, subject to
A survey released earlier on Thursday, which covered
thousands of companies, from banks to hotels and restaurants,
showed order books had shrunk at their fastest pace in half a
year last month.
"The recession is deepening once again as businesses report
that they have become increasingly worried about the region's
debt crisis and political instability," said Chris Williamson,
chief economist for the survey's compiler Markit.
The Bank of England also chose to hold its key rate
unchanged at 0.5 percent, where it has been for over four years,
despite having a new remit to promote growth.
In the European debt market Spanish bond yields were falling
after Madrid successfully sold 4.3 billion euros of new debt
despite worries about the fallout from the bailout of Cyprus and
Italy's political stalemate.
"It shows that despite all the uncertainty we have seen in
Cyprus recently and ongoing political uncertainty in Italy,
Spanish bonds are still seeing decent demand," said Nick
Stamenkovic, strategist at RIA Capital Markets.
Spanish 10-year government bond yields dropped 3 basis
points to around 4.9 percent, while equivalent
safe-haven German bonds were down 1 basis point at 1.267 percent
Elsewhere, oil was steadily recovering after its biggest
fall in five months on Wednesday when weak private sector jobs
data and swelling inventories in the United States had muddied
the demand outlook.
"There is now no shortage of oil in the United States or
anywhere else. This is very clear. And we can see that the
economic recovery is also not as good as we thought it was,"
said Ken Hasegawa, a commodity sales manager at Newedge.
"We see more downside pressure on oil prices," he said.
Brent crude added 0.5 percent to $107.65, and U.S.
crude was holding around $94.40 a barrel.