LONDON Japanese stocks outperformed all others Wednesday as investors anticipated aggressive policy action from the Bank of Japan.
The country's central bank started its first policy meeting under a new governor committed to aggressive monetary action to end years of economic malaise. There are expectations that the bank will announce a big monetary stimulus at the end of its meeting on Thursday.
Bank of Japan chief Haruhiko Kuroda has vowed to do whatever it takes to get Japan out of its debilitating deflation. Kuroda, who assumed his post March 19, has pledged to cooperate with Prime Minister Shinzo Abe's program of big government spending, monetary easing and economic reforms aimed at improving Japan's competitiveness.
"He has previously stated that he will implement what he calls 'bold stimulus' and such stimulus will likely include a program of increasing purchases of Japanese government debt," said Neil MacKinnon, global macro strategist at VTB Capital.
Optimism about the meeting's outcome sent the Nikkei 225 index in Tokyo soaring 3 percent to close at 12,362.20.
The risk is that the Bank of Japan disappoints and that could prompt a reverse Thursday.
"The problem we currently have in the markets is that this has been built up for months now," said Craig Erlam, market analyst at Alpari.
The Bank of Japan will be the main point of interest Thursday even though the European Central Bank and the Bank of England both announce their latest policy decisions, too. No changes are expected in Frankfurt or London, however.
Trading was fairly lackluster following a solid session on Tuesday and ahead of a run of key U.S. economic data that culminates on Friday with the monthly U.S. nonfarm payrolls report for March.
The payrolls figures often set the market tone for a week or two after their release and may have an even bigger bearing this time as investors try and work out when the U.S. Federal Reserve will start withdrawing its economic stimulus.
In Europe, the FTSE 100 index of leading British shares was down 0.4 percent at 6,463 while Germany's DAX was flat at 7,943. The CAC-40 in France was 0.1 percent lower at 3,801.
Wall Street was poised for a steady opening, with Dow futures up 0.1 percent and the broader S&P 500 futures 0.2 percent higher. How U.S. shares actually perform could well hinge on the monthly private payrolls report from ADP. Another increase of about 200,000 is anticipated.
The figures could also have a big impact on the dollar, which was subdued. The euro was up 0.1 percent at $1.2833 and the dollar was 0.2 percent higher against the Japanese yen, at 93.56 yen.
Elsewhere in Asia, stock markets struggled despite the Nikkei's surge. Hong Kong's Hang Seng fell 0.1 percent to 22,337.49 while South Korea's Kospi shed 0.2 percent to 1,983.22.
Oil prices tracked most equity markets lower, with the benchmark New York rate down 34 cents at $96.85 a barrel.