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Below-par US growth keeps the pressure on markets

Published on NewsOK Modified: April 26, 2013 at 12:14 pm •  Published: April 26, 2013

The news that consumer prices in Japan fell by 0.9 percent in the year to March highlighted the scale of the challenge facing the Bank of Japan, which has been tasked to get inflation up to 2 percent. In its attempt to do so, it announced a massive monetary stimulus package this month. It did not announce any new measures after its latest meeting Friday.

The prospect of more money in Japan has hit the yen hard to the likely benefit of the country's powerhouse exporters. And that's one reason why Tokyo's Nikkei 225 stock index has performed so strongly over the past few weeks.

However, the fall in prices weighed on Japanese stocks and gave the Asian trading session a soft tone. The Nikkei, which in the morning hit its highest intraday level in five years at 13,983.87, fell 0.3 percent to close at 13,884.13. The yen, however, clawed back some ground after the BoJ announcement of unchanged policies. The dollar was 1.5 percent lower at 97.89 yen.

"I think if there is anything to take from today's BoJ policy meeting it is the fact that the BoJ believes it has made all the announcements necessary in order to achieve its more aggressive inflation target," said Derek Halpenny, European head of global markets research at Bank of Tokyo-Mitsubishi UFJ.

Elsewhere in Asia, Hong Kong's Hang Seng rose 0.7 percent to 22,547.71 while South Korea's Kospi fell 0.4 percent at 1,944.56. Benchmarks in mainland China and India fell.

Oil prices tracked equities lower with the benchmark New York rate down 97 cents at $92.66 a barrel. Oil prices, like other commodities, have generally rebounded this week so some form of profit-taking was always likely.