Tokyo stocks close higher as BoJ holds on stimulus

Japanese stocks extended gains to a sixth session Wednesday after the Bank of Japan decided to hold fire on fresh stimulus measures despite sluggish growth and stagnant prices.

The decision, after a two-day meeting, follows a string of disappointing data that have raised questions about the effectiveness of Prime Minister Shinzo Abe's drive to kickstart the economy, which contracted in the second quarter of the year.

Tokyo stocks recovered from losses early in the day after the International Monetary Fund cut down the country's growth forecast for 2015 and the following year.

BoJ governor Haruhiko Kuroda is currently giving a press conference which investors hope will give further clues about if and when the trigger might be pulled on future stimulus.

"Expectations for further easing are deeply entrenched, leading us to a sixth consecutive day of gains," Naoki Fujiwara, chief fund manager at Shinkin Asset Management in Tokyo, told Bloomberg News.

Immediately after the BOJ meeting "we saw a sharp rise in the yen, but after that ended we're seeing buying."

The central bank voted 8-1 in favour of refraining from expanding its massive easing programme.

Kozo Yamamoto, a Lower House lawmaker considered one of the architects of the government's 'Abenomics' growth blitz, said he believed additional easing was delayed because the BoJ was worried a weaker yen would hurt the country's poor.

He said the central bank should add monetary stimulus later to plug Japan's national debt, which is already more than twice as big as its gross domestic product (GDP).

"I think the Japanese fiscal situation is improving at a remarkable pace because the BoJ is purchasing national bonds," Yamamoto told reporters.

On Tuesday, the IMF called on authorities to work harder to slash that debt, while warning that the economy will expand at a slower rate than previously forecast this year and next.

The Washington-based Fund estimated in its latest World Economic Outlook that growth in the world's number three economy this year would hit 0.6 percent, followed by a 1.0 percent expansion in 2016.

That compares with projections earlier this year for 0.8 percent and 1.2 percent respectively, while the economy shrank 0.1 percent in 2014.

In Tokyo, the Nikkei 225 index at the Tokyo Stock Exchange advanced 0.75 percent, or 136.88 points, to 18,322.98, while the broader Topix index of all first-section shares rose 1.17 percent, or 17.33 points, to 1,493.17.

In shares trading, energy firms broadly advanced on higher oil prices. Inpex went up 7.22 percent to 1,217.5 yen, Idemitsu gained 4.66 percent to 1,976 yen, and JX Holdings ended 3.01 percent higher at 477.6 yen.

Nissan rose 0.25 percent to 1,173 yen on a Bloomberg News report that French automaker Renault SA is considering plans to restructure its alliance with the Yokohama-based firm.

Toyota advanced 1.84 percent to 7,351 yen, while market heavyweight Fast Retailing, operator of the Uniqlo clothing chain, shed 1.56 percent to 49,800 yen.

The dollar stood at 120.00 yen in early afternoon trade in Tokyo, down from 120.28 yen before the BoJ decision Wednesday and from 120.21 yen in New York Tuesday.

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