SEOUL, South Korea - Japan's stock benchmark surged 5 percent to the highest level since late 2007 and the yen slid against the dollar Friday after the Bank of Japan unexpectedly announced new stimulus to boost a flagging economy. Expectations Japan's $1.1 trillion public pension fund would boost its equity holdings gave a further boost to the market.
European shares and U.S. futures also traded sharply higher after the Japanese central bank's announcement. The dollar soared 2 percent to 111.63 yen, which was the Japanese currency's lowest level in more than five years.
The Bank of Japan said it would increase its asset purchases by between 10 trillion yen and 20 trillion yen ($90.7 billion to $181.3 billion) to about 80 trillion yen ($725 billion) annually.
Confirmation of the change in the Government Pension Investment Fund's asset allocations came after the close of trading. The plan agreed to Friday calls for holdings of bonds to fall from about 60 percent to 35 percent. Holdings of shares will rise to about 50 percent, with half in domestic shares and half in foreign shares.
In Europe, Britain's FTSE 100 advanced 1.1 percent to 6,532.22. France's CAC 40 jumped 1.8 percent to 4,214.63 and Germany's DAX climbed 1.6 percent to 9,260.95. Futures showed Wall Street was set for another day of gains. S&P 500 and Dow Jones futures rose about 1.1 percent each as of 7:53 a.m. ET.
Earlier in Asia, Tokyo's Nikkei 225 finished 4.8 percent higher at 16,413.76 after shedding some of its initial 5 percent gain. Hong Kong's Hang Seng rose 1.3 percent to 23,998.06 and Seoul's Kospi was up 0.3 percent at 1,964.43.
Australia's S&P/ASX 200 rose 0.9 percent to 5,516.90. Stocks in mainland China, India and Southeast Asia also rose.
The Bank of Japan's stimulus announcement came after economic data showed that Japan's economy remained in the doldrums following a sales tax hike in April. Japan's inflation slipped and household spending fell in September while unemployment ticked up.
While the stimulus move immediately sent stocks higher, some questioned the implications of a weak yen for the rest of the world and whether the measures would have a positive impact on wages or Japan's small businesses
"We will now most likely get another temporary leg up in wealth-related economic activity in Japan along with a very unhelpful deflationary Japanese yen devaluation for the rest of the globe," Michel Every, head of financial markets research at Rabobank, said in a commentary. "What is really needed are major structural economic reforms."
Investors in Asia also took cues from overnight gains on Wall Street, which was helped by strong growth figures from the U.S. and upbeat earnings reports by companies such as Visa.
The U.S. economy expanded 3.5 percent in the July-September quarter from a year earlier, driven by solid gains in business investment, export sales and the biggest jump in military spending in five years. The figure was slightly above what economists expected. The world's largest economy continued its recovery from the previous quarter, when it expanded 4.6 percent.
The growth figures were released after the Federal Reserve confirmed the end of its $4 trillion bond-buying program because the U.S. economy no longer needs as much assistance. It also signaled that an eventual interest rate hike is on the cards
Benchmark U.S. oil erased brief gains and was down 48 cents to $80.64 a barrel in electronic trading on the New York Mercantile Exchange. The contract dropped $1.08 to settle at $81.12 on Thursday. Brent crude, used to price oil in international markets, dipped $1.04 to $85.20 in London
In currencies, the euro fell to $1.2552 from $1.2607.