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HONG KONG: A move by the Bank of Japan to double the cash available to lenders combined with the US Federal Reserve's announcement it would hold rates at a record low for some time boosted Asian stocks on Wednesday.
The BoJ said it would increase to 20 trillion yen (220 billion US dollars) a short-term loan facility that other banks could access to free up money as it tries to kick-start a faltering recovery in the world's second-biggest economy.
It also said after a two-day meeting that it would maintain interest rates at near-zero percent -- where they have been since December 2008 -- to fight deflation, which is weighing on the nation's rebound.
Tokyo closed up 1.17 percent, or 125.27 points, at 10,846.98, while Sydney also rose 1.17 percent, or 56 points, to 4,853.2.
"The central bank's decision is what has been expected... this is giving investors a relief," Shinichiro Matsushita, market analyst at Daiwa Securities, told Dow Jones Newswires.
Hong Kong closed 1.72 percent, or 361.56 points, higher at 21,384.49 and Shanghai added 1.93 percent, or 57.64 points, to end at 3,050.48.
In announcing its decision the Bank of Japan said: "Japan's economy is picking up mainly due to various policy measures taken at home and abroad."
However, it said there was "not yet sufficient momentum to support a self-sustaining recovery in domestic private demand."
"The bank recognises that it is a critical challenge for Japan's economy to overcome deflation and return to a sustainable growth path with price stability," it added, maintaining its earlier view.
"The bank will continue to aim to maintain the extremely accommodative environment."
The BoJ's facility offers three-month loans at 0.1 percent against collateral such as government bonds and corporate debt. However, it surprised markets Wednesday by not extending the loan duration to at least six months.
The BoJ move follows the US Fed's pledge to keep interest rates at the "exceptionally low" zero to 0.25 percent range for "an extended period".
It also upgraded its view of the economy, saying "economic activity has continued to strengthen" while "the labour market is stabilising", a more upbeat description than the phrasing used after its last policy meeting.
Car stocks benefited from the Nikkei's rise, with Honda up 0.15 percent to 3,250 yen despite recalling an estimated 412,000 vehicles in the United States because of problems with "soft" brakes.
Toyota added 0.84 percent to 3,580 yen after soaring 1.28 percent Tuesday as worries slowly receded about recent global recalls.
Wall Street was boosted by the announcement, rising 0.41 percent on Tuesday.
In Europe, concerns began to recede for fiscally embattled Greece after Standard & Poor's lifted its threat of an imminent downgrade of the country's debt rating, dealers said.
The international agency maintained Greece's credit ratings, saying Athens' austerity budget was "appropriate" for achieving its 2010 fiscal target.
In Brussels, European finance ministers backed a plan to make emergency loans available to Greece, if needed, to shield the country from bankruptcy, describing the rescue plan as a necessary evil.
- AFP/ir
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