The Nikkei 225 Stock Average jumped the most in three weeks, the yen fell against 14 of the 16 most- traded currencies and government bonds rallied after the Bank of Japan cut benchmark interest rates and pledged to buy 5 trillion ($60 billion) of assets. Asian stocks pared losses. The Nikkei 225 climbed 1.5 percent, erasing a 0.5 percent decline, to 9,518.76 as of 3 p.m. in Tokyo. The yen dropped to 83.88 per dollar from 83.36 in New York. Japanese 10-year bond yields fell to a six-week low. The MSCI Asia Pacific Index sank 0.2 percent. Standard & Poor’s 500 Index futures rose 0.2 percent and those for the Euro Stoxx 50 increased 0.3 percent. The Bank of Japan’s decision to create a fund to buy bonds and other assets comes as policy makers in the U.S. and the U.K. consider similar steps to support their flagging economies. At the same time, governments in emerging markets from Brazil to South Korea are increasing currency controls as investment inflows threaten export growth. “We’re looking to high-growth economies in both fixed and equity space,” Pacific Investment Management Co.’s Bill Gross, manager of the world’s biggest bond fund, said on Bloomberg Television’s “Surveillance Midday” with Tom Keene. Pimco’s “new normal” thesis “suggests low growth in the developed economies and higher growth in the developing economies.” Five stocks advanced for every four that fell on the MSCI Asia Pacific Index, which gained 0.7 percent in the past two days. Australia’s S&P/ASX 200 Index dropped 0.4 percent after the central bank signaled it will raise interest rates as it left its overnight cash-rate target unchanged. BOJ Pledges Japan’s Topix Index climbed 1.3 percent, rallying from a 0.7 percent drop as the central bank’s pledges today raised optimism that the yen will weaken, bolstering the value of overseas sales at the country’s biggest exporters. The Bank of Japan said its fund will buy government bonds and other assets. The central bank also lowered the benchmark interest rate to a range of zero percent to 0.1 percent from the previous 0.1 percent target. Fourteen of 17 economists surveyed by Bloomberg News had instead predicted the BOJ would expand a bank-loan program “This shows a commitment by the Japanese authorities to do whatever they can at their disposal to not allow the yen to appreciate anymore and provide liquidity,” said Nader Naeimi, a Sydney-based strategist at AMP Capital Investors Ltd., which manages $85 billion. “Any measure to increase liquidity or loosen monetary situation is a step in the right direction.” Sony, Toyota Sony Corp., the maker of Bravia televisions, jumped 1.6 percent. Fanuc Ltd., Japan’s largest industrial robot maker, gained 2.1 percent. Toyota Motor Corp., the world’s biggest carmaker, gained 0.4 percent after falling as much as 1.5 percent earlier. The yen was set for its biggest daily decline against the dollar since Sept. 15. Japan’s currency fell to 114.90 per euro from 114.08. “The BOJ action came as a surprise because I had expected they wouldn’t cut rates before the Federal Reserve,” said Junichi Makino, a senior economist at Daiwa Institute of Research Ltd. in Tokyo. “The BOJ moved to back up intervention efforts by the government.” The yield on the benchmark 10-year bond fell three basis points to 0.905 percent at Japan Bond Trading Co., the nation’s largest interdealer debt broker. The price rose 0.276 yen to 100.867 yen. The yield dropped to as low as 0.895 percent, the least since Aug. 25. To contact the reporter for this story: Darren Boey at dboey@bloomberg.net. To contact the editor responsible for this story: Patrick Chu at pachu@bloomberg.net.

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