The dollar and yen slipped as portfolio managers shifted some funds into riskier assets while preparing to close their books for the year.
Japan’s Nikkei average pushed up 1.6 percent as some battered shares such as Toyota Motor Corp got a lift from such portfolio window-dressing despite data showing a record plunge in industrial production in November.
Japanese governments bonds climbed, driving the 20-year yield to a five-year low, on regular month-end buying from pension funds and other data pointing to a return of deflation next year.
Investors have largely shrugged off the array of bleak reports showing the financial crisis dealt a severe blow to the global economy at the end of 2008, instead looking ahead to see how government efforts to revive growth will work next year.
“Past experience shows that stock prices tend to gain around the year-end and the start of the year on hopes for the coming year. But it’s not as if investors can keep buying this time around as the outlook for the economy is murky,” said Yutaka Miura, a senior technical analyst at Shinko Securities.
Japanese Economics Minister Kaoru Yosano told Reuters in an interview that Tokyo may take more fiscal spending measures if economic conditions worsen further, on top of a stimulus package totalling 75 trillion yen ($829 billion).
Trading activity was light with many financial markets closed following Christmas Day. Markets in Hong Kong and Australia were closed. Many markets in Europe will remain closed, even as U.S. markets will reopen.
The MSCI index of Asia-Pacific shares outside Japan ..MIAPJ0000PUS gained 0.1 percent but was down 2 percent this week and 55 percent this year, on track for the biggest yearly loss in its 20-year history.
Taiwan’s TAIEX index inched up 0.3 percent after the government pledged to help flat-screen television makers in the latest effort to prop up the country’s tech industry. AU Optronics, the world’s No. 3 LCD maker, jumped 2.5 percent.
South Korea’s KOSPI fell 0.9 percent on worries that companies would issue slim year-end dividends.
The dollar and yen dipped against most major currencies. The euro edged up 0.3 percent to $1.4050, while single currency rose 0.3 percernt to 127.10 yen. As the dollar slipped, gold edged up $4 an ounce to $848.
JGBs gained across the board, extending a winning streak since the Bank of Japan cut rates to 0.1 percent last week, boost its monthly purchases of government bonds and said it was taking more steps to alleviate the freeze in credit markets.
The yield on benchmark 10-year JGBs dipped a basis point to 1.200 percent, holding near a 3-1/2-year low. The 20-year yield dropped 6.5 basis points to 1.755 percent and was down 16 basis points this week.
The first match of the series will kick off on December 14 in Perth
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