World stocks heat up as Bank of Japan goes sub-zero

 

 



LONDON (Reuters) - World shares jumped and the yen slumped on Friday after the Bank of Japan took one of its main interest rates into negative territory, its boldest step yet to re-inflate the economy.

The yield on Japanese benchmark government bonds plunged to record lows after the Bank of Japan said it would charge 0.1 percent for excess reserves and may cut rates further if necessary, an aggressive policy pioneered by the European Central Bank.

Most investors had believed Japan's policymakers were too cautious to ever adopt such a radical measure. The dollar surged in response, rising about three yen to an almost six-week high of 121.495 . By 1230 GMT (7:30 a.m. ET) it was up 1.8 percent at 120.97.

"We're only one month into the year and two of the major central banks have already surprised markets," said J.P. Morgan Asset Management's fixed income CIO in London, Nick Gartside. "The ECB has signaled more policy action in March and the BOJ has moved to negative interest rates, a policy previously thought of as unthinkable."