Nikkei Bulls Charge In As Dollar/Yen hovers At 100

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Bulls drove Japanese shares to nearly five-year highs as yen bears clawed at the symbolic 100 yen/dollar door after the Group of 20 gatherings in Washington all but endorsed the Bank of Japan's aggressive reflation drive.

A visitor walks near the logo of the Tokyo Stock Exchange in Tokyo

Bulls drove Japanese shares to nearly five-year highs as yen bears clawed at the symbolic 100 yen/dollar door after the Group of 20 gatherings in Washington all but endorsed the Bank of Japan's aggressive reflation drive.

The dollar was trading at 99.78 yen, after earlier rising to 99.89, just below a four-year high of 99.95 yen hit on April 11.

In a communiqué after a two-day meeting on Friday, the G20 simply said it would be "mindful" of possible side effects from extended periods of monetary stimulus, without singling out Japan as some in the markets had feared.

"Following the G20, players feel comfortable selling the yen further, and it is just a matter of timing when the symbolic 100 yen level is hit," said Yuji Saito, director of foreign exchange at Credit Agricole in Tokyo.

Japan's Nikkei stock average .N225 opened up 1.7 percent, cheering the G20 outcome as a clear trend for the yen's weakness improves prospects for Japanese corporate earnings. .T

The MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS inched down 0.1 percent after ending a volatile week with a 0.5 percent drop. Global equities markets and commodities rebounded late last week after tumbling sharply on concerns about growth slowdown in the United States and China.

Australian shares .AXJO were up 0.1 percent while South Korean shares .KS11 opened down 0.2 percent.

With few major events or news scheduled during the session in Asia, market focus was largely on when the dollar will top 100 yen to renew its four-year peak.

With the euro zone's economy looking fragile, the U.S. dollar looked set to strengthen relative to other major currencies. How far that would go depended on U.S. economic data rather than factors from Japan, Credit Agricole's Saito added.

Heavy option barriers were lined up around 100 yen to the dollar, but once the level is broken the dollar has more upside as it would trigger stop-loss buying and target 101.45, a 2009 high, he said.

Asian shares were capped on Monday with investors remaining wary of volatility in riskier assets such as shares and gold while digesting current developments.

Finance leaders of the G20 club of advanced and emerging economies also edged away from a long-running drive toward government austerity in rich nations, rejecting the idea of setting hard targets for reducing national debt in a sign of worries over a sluggish global recovery.

That concern was highlighted on Saturday when the International Monetary Fund's steering committee said at the conclusion of the world lender's spring meeting that monetary policy alone was not enough to restore confidence in the shaky global economy. They urged countries to take additional steps to reinvigorate growth and create jobs.

Data on Friday showed currency speculators raised their bets against the yen in the week ended April 16, while lifting positions in favor of the U.S. dollar.

The euro was down 0.2 percent to $1.3055 and traders expected the single currency to face pressure as a slew of euro zone economic reports will be released this week.

Italy's re-election of a president on Saturday has raised the prospect of an end to the two months of political stalemate that followed a general election, helping to support the euro.

U.S. crude was steady around 88.01 a barrel. <O/R>

Spot gold was up 0.2 percent to $1,407.81 an ounce, well above its lowest in more than two years of $1,321.35 touched last week.

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