By PAN PYLASAP Business Writer
LONDON (AP) - An upward revision to Japanese growth helped the country's Nikkei stock index surge Monday while markets elsewhere settled down following last week's better-than-expected U.S. jobs data.
The Nikkei soared 4.9 percent to 13,514.20 after the first-quarter growth rate of the world's number 3 economy was revised up from an annualized rate of 3.5 percent to 4.1 percent. The Nikkei's rise more or less made up for the retreat suffered by Japanese stocks last week, but the scale of the advance shows just how volatile the index has become.
After a stellar first few months of the year, which sent the Nikkei up to five-year highs, the index has become increasingly volatile and lost over 6 percent of its value last week.
The key consideration for investors is whether the big monetary stimulus announced at the start of this year by the Bank of Japan to get the country out of its two-decade stagnation will work. The policy, which is designed to double Japan's monetary base and get inflation up to 2 percent, is a cornerstone of the economic recovery plan promised by Prime Minister Shinzo Abe.
"Overall this helped provide evidence that Shinzo Abe's Abenomic policies are having a tangible impact upon the economy and that there is perhaps more credence given to the rally in equities within the economy given the longer term outlook provided by a successful policy set," said Joshua Mahony, research analyst at Alpari.
Elsewhere, last Friday's U.S. payrolls figures, which showed 175,000 jobs added in May, remained the focus and contributed to a largely steady tone in trading in Europe and the U.S.
In Europe, the FTSE 100 index of leading British shares was down 0.2 percent at 6,398 while Germany's DAX rose 0.7 percent to 8.304. The CAC-40 in France was 0.2 percent lower at 3,866.
In the U.S., the Dow Jones industrial average was steady at 15,252 while the broader S&P 500 index was flat at 1,644. The news from ratings agency Standard & Poor's that it was revising up its outlook on the U.S. economy to "stable" from "negative" had little impact.
With no scheduled U.S. economic data Monday, investors continue to digest the payrolls numbers. Though the increase was a little higher than forecasts, it wasn't so high as to prompt investors to price in the prospect of an imminent change in U.S. monetary policy. Over recent weeks, investors have grown fearful that the Federal Reserve will reduce the amount of financial assets it buys in the markets - so-called tapering.
"These were not figures that would have been taken as being particular positive for risk assets a few weeks ago but they were probably in the range of 'not too hot, not too cold' which was a relief for the markets," said Gary Jenkins, managing director of Swordfish Research. "Not strong enough to encourage the Fed to begin tapering anytime soon but not so cold as to lead to concerns about the economy slowing."
The prospect of unchanged Fed policy in the near-term, which became more likely last week, has weighed on the dollar but the currency has found renewed support Monday - while the euro was down 0.2 percent at $1.3187, the dollar was 1.6 percent higher at 99.11 yen.
Elsewhere in Asia, Hong Kong's Hang Seng index added 0.2 percent to 21,615.09 while South Korea's Kospi gained 0.5 percent to 1,932.70. Monday's gains came despite China's weekend data that showed trade, retail sales and other activity in May weaker than expected, fueling concerns about the country's shaky economic recovery. Markets in China were closed for holidays.
Oil prices gave up some recent gains, with the benchmark New York rate down 52 cents at $95.51 per barrel.
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