Japan's rate decision lifts bonds, shares under tech cloud

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The BOJ left its key interest rates unchanged while announcing policy tweaks, including reducing the amount of bank reserves subject to its negative interest rate and forward guidance for policy rates.

The Japanese yen is now slightly weaker against all major currencies except the Australian dollar. The FTSEurofirst 300 index .FTEU3 of leading European shares closed down 0.3 percent.

Facing down market speculation that he would make broader changes, Kuroda on Tuesday committed to "continuous powerful monetary easing" that leaves him at odds with counterparts such as the U.S. Federal Reserve which are tightening policy.

Anglo American, Antofagasta and Glencore fell between 0.8 percent and 1.4 percent. "Europe's higher weighting to banks/resource will help it vs the U.S".

U.S. President Donald Trump pays attention to the stock market and if there were a significant sell-off on trade tariff headlines, Smith said, Trump would reverse positions. "The market is, at least for now, seeing this as negotiations as opposed to the beginning of an all out-out global trade war", Smith said.

The pound rose 0.25 percent against the dollar, even as its modest gains reflected concern among investors about the currency's prospects ahead of the widely anticipated interest rake hike. Investors remained cautious over the supply outlook and a potential hit to global output due to US sanctions on Iran. The kiwi rose to 92.09 Australian cents from 91.90 cents yesterday.

Some large option expiries around the 112 dollar/yen line amounting to almost $1.5 billion over the next week should check further dollar gains against the euro while implied gauges of yen volatility JPY1MO= ticked lower.

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Analysts said the euro rebounded largely because traders felt it had been oversold last week.

Just the chance of such a shift has sent the yen higher in the last week or so, leaving the dollar around 111.13 yen JPY= from a peak of 113.18 earlier in the month.

While the yen is mostly lower today, Japanese government bond (JGB) yields are up sharply.

Overall, 11 of the 19 banks and asset managers polled said Japan's central bank is unlikely to make any change to its monetary policy given the weak inflation outlook.

In relation to the long-term rate, the BOJ reiterated that it will buy Japanese government bonds (JGBs) to keep the 10-year yield at about zero per cent. The open-ended plan pledged to keep interest rates at extremely low levels for an "extended period".

During the two-day meeting, the BOJ also made a decision to maintain its short-term interest rate at minus 0.1 percent, but said that it will reduce the amount of funds subject to the rate that financial institutions keep parked at the central bank.

US gold futures GCcv1 for August delivery settled down $1.70 at $1,221.30 per ounce.

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