Asian markets rebound, weaker yen boosts Tokyo

HONG KONG (AFP) - Asian markets climbed on Wednesday following big losses in the previous session, with Tokyo surging as the yen tumbled after Bank of Japan governor Masaaki Shirakawa said he will step down early.

Traders also took a lead from Wall Street and Europe, where encouraging economic data offset concerns over political uncertainty in Spain and Italy.

Tokyo soared more than three per cent to a 33-month high, Sydney added 0.84 per cent, Seoul gained 0.19 per cent, Hong Kong added 0.62 per cent and Shanghai was up 0.10 per cent.

Wellington was closed for a public holiday.

Japanese foreign exchange traders welcomed Mr Shirakawa's announcement that he would step down on March 19, about three weeks before the end of his term.

It fuelled expectations that Prime Minister Shinzo Abe will likely fill the post with someone who shares his ideas on aggressive monetary easing that would see more yen pumped into the economy.

The Japanese currency tumbled in New York. By the end of trade on Tuesday the dollar bought 93.61 yen (S$1.24) and the euro was at 127.13 yen, compared with 92.28 yen and 124.67 yen earlier in the day in Tokyo.

In early Tokyo trade on Wednesday the dollar bought 93.55 yen and the euro fetched 127.06 yen.

The euro was also at US$1.3581 (S$1.68), compared with US$1.3582 in New York and much stronger than the US$1.3489 on Tuesday in Tokyo.

Major Japanese exporters have been raising their earnings outlooks thanks to recent weakness in the yen, heartening investors.

"Global markets continue to normalise, allowing risk-on trading to resume," said SMBC Nikko Securities general manager of equities Hiroichi Nishi.

"This is partially reflected in the fall of the yen," he told Dow Jones Newswires.