Stocks rise after Japan announces easing of monetary policy

TOKYO, Oct. 31 (UPI) -- An unexpected expansion of money supply by the Bank of Japan sent the Dow Jones Industrial Average to an intraday record high Friday.

After Japan's central bank announced the increase, boosting stimulus measures and easing monetary policy, the Tokyo stock market rallied, following those in Europe and then on Wall Street. At 10 a.m. the Dow average was 17,325.49, an increase of 130.07 points.

The announcement, in which the Bank of Japan said it would increase purchases of Japanese bonds, long-term bonds and exchange-traded funds, caught investors by surprise. The effort is meant to reduce the chance of a deflationary threat. New data indicated an increase in the national sales tax, earlier this year, brought about a decline in consumption and job creation.

"We are at a critical moment. There is a risk that conversion of deflationary mind-set, which has so far been progressing steadily, might be delayed," Bank of Japan Gov. Haruhiko Kuroda said, noting downward pressure on prices could impede attempts to persuade consumers higher prices are forthcoming. He referred to the stimulus as "pre-emptive."

The actions caught economists by surprise, but led to a rapid rise across the world's stock exchanges. Japan's Nikkei 225 climbed 4.83 percent, to 16,413.76, an increase of 755.56 points; shares rose 1.25 percent on Hong Kong's Hang Seng index, 1.22 percent on the Shanghai index and 1.9 percent on India's Sensex. Early trading in Europe saw Germany's DAX, France's CAC and Britain's FTSE 100 up at least 1.8 percent.