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Tokyo stocks jump 2.29% in early trade

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TOKYO, Jan 25 AFP

January 25 2013, 1:02PM

Tokyo stocks have surged 2.29 per cent, as the yen remained weak and following another positive showing by the Dow Jones Industrial Average overnight.

The benchmark Nikkei 225 index on Friday morning was up 242.48 points to 10,863.35 in early trade.

"Stocks are set to rise as players key on the weaker yen, which is in turn bolstered by hopes for an acceleration in the global economic recovery," said Hiroichi Nishi, SMBC Nikko Securities general manager of equities.

In forex trade, the US dollar stood at Y90.42, against Y90.40 in New York, while the euro bought Y120.87 against Y120.91. Against the US dollar, the single currency fetched $US1.3371, from $US1.3376.

The recent drop-off in Japan's currency after a new conservative government swept to power on pledges to pressure the Bank of Japan into aggressive easing, which tends to weaken the yen, has sparked criticism that Tokyo was meddling with exchange rates.

On Thursday, German Chancellor Angela Merkel voiced concern about Japan's foreign exchange policy, after the central bank set out a plan for indefinite monetary easing and set a new inflation target to stoke growth in the country's deflation-plagued economy.

The move was widely seen as a bow to the new powers in Tokyo.

"I will admit I am not without some concern about Japan right now," Merkel told top business and political leaders at the World Economic Forum in Davos.

She added that "political influences or manipulations of the exchange rate" was a hot topic within the G20 club of leading industrialised nations.

However, Japan's top financial diplomat has rejected claims that the country's new government orchestrated a drop in the yen.

Meanwhile, the Tokyo market largely shrugged off official data showing Japan's long-suffering economy remained stuck in a deflation rut, with core consumer prices slipping 0.1 per cent in 2012, the fourth annual decline.

Investor sentiment was buoyed by hopes for strong corporate results in Japan, dealers said.

"Generally solid US corporate earnings are generating the feeling that Japanese earnings results, many of which are awaited next week, will also be good," SMBC Nikko's Nishi told Dow Jones Newswires.

On Thursday, the blue-chip Dow added 0.33 per cent to 13,825.33, lifted in part by an improvement of the weekly US jobless claims data, although the tech-heavy Nasdaq fell 0.74 per cent.