Nikkei surges 2.43% on report of more flexible Chinese yuan

08:39, June 22, 2010      

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Tokyo stocks surged Monday with Japan's key Nikkei gaining 2.43 percent and hitting one-month closing high as China's decision to allow the yuan to move more flexibly fueled optimism that demand from Japan's biggest export market will continue to expand and investor sentiment rose on the implications for the global economy.

The 225-issue Nikkei Stock Average advanced 242.99 points, or 2. 43 percent, from Friday to 10,238.01, marking its highest closing level since May 18.

Meanwhile, the broader Topix index of all First Section issues on the Tokyo Stock Exchange added 17.85 points, or 2.02 percent, to 902.49.

China's central bank maintained that it would keep intact the basic stability of the yuan -- keeping the currency at a reasonable and balanced level to support stability in the economy and that any adjustment would be gradual. Local brokers said the news, which some thought would send the yen higher, had been met well by the market and the positive effects the move could have on the global economy.

"First, the sharply stronger yen that some investors feared would result from this hasn't materialized," said Takashi Ushio, head of the investment strategy division at Marusan Securities.

"But even more than this, the move suggests sustainable economic growth for China, which is boosting shares pretty much across the board," he said.

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