TOKYO, Oct. 31 (Xinhua) -- The Nikkei stock index surged 4.83 percent to a seven-year closing high Friday as the Bank of Japan ( BOJ) unexpectedly expanded its already massive monetary easing program, sending the yen spiraling down versus its major counterparts, and the government stood poised to announce its pension fund allocations.
The Nikkei 225 index surged 755.56 points to end the week at 16, 413.76, marking its highest closing level since November 2007, while the broader Topix index of all first-section issues leapt 4. 28 percent, or 54.74 points, to finish at 1,333.64.
Local traders said the market was already off to a good start in the morning session, on the heels of a solid finish on Wall Street, following the U.S.'s latest upbeat gross domestic product data, and investor sentiment was further galvanized by news that Japan's Government Pension Investment Fund (GPIF) could announce its new investment portfolio as soon as Friday.
The Nikkei business daily reported that the 127 trillion yen (1. 2 trillion U.S. dollars) GPIF would announce its new portfolio allocations today and would more than double its target for domestic shares to 25 percent of its holdings.
The GPIF had originally targeted 12 percent for its share target. In addition the nation's biggest pension fund will also lower its target for domestic bonds from 60 percent to 35 percent.
The biggest boost to investor sentiment on Friday, however, was the central bank's decision to boost its already huge asset purchasing program.
BOJ policy makers on Friday afternoon took market analysts by shock when they voted 5:4 to increase its purchasing of Japanese government bonds from financial institutions, to an annual pace of outstanding bonds totaling 80 trillion yen, an increase of 30 trillion yen.
Japan's central bank also said it would purchase more trusts from other banks and financial institutions.
"Further monetary easing, which was seen as unlikely for today, is the main factor behind the surge in the afternoon, providing strength to the market," Hiroichi Nishi, assistant general manager of equity research at SMBC Nikko Securities Inc., said.
Other analysts noted that despite a slew of lackluster economic data released this morning, including a severe drop in household spending, slowing inflation and rising unemployment, investors were still keen to chase the market higher ahead of the long weekend here, spurred on, in part, by the weaker yen.
Following the BOJ's shock decision to expand its monetary easing program, in currency markets the yen dropped to a near seven-year low of 111.0 yen against the U.S. dollar, a real boon for exporters who rely on a weaker yen to boost profits made overseas when they're repatriated.
As such, Toyota accelerated 3.8 percent to 6,498 yen and Nissan Motor advanced 5 percent to 997 yen. Fuji Heavy Industries, maker of Subaru automobiles, meanwhile, jumped 7.3 percent to 3,599 yen.
Toshiba was very much in the spotlight Friday, leaping 4.5 percent to 483 yen, after announcing its group net profit in the April-September fiscal first half rocketed 43.3 percent on-year, to 30.85 billion yen.
Panasonic climbed 3.28 percent to 1,305 yen and Canon gained 4. 6 percent to 3,389 yen, on news of the camera maker's plans for a large share buyback.
Consumer electronics juggernaut Sony added 0.82 percent to 2, 072 yen, but Fujitsu slumped 3.72 percent to 664 yen, after saying yesterday both its operating and net profits retreated in Q2.
But financial issues held firm, with top-lender Mitsubishi UFJ Financial Group Inc., advancing 4 percent to close the week at 632 yen, while smaller rival Sumitomo Mitsui Financial Group Inc. surged 7.2 percent to finish at 4,399.5 yen.
Trading volume on Friday soared to 4.01 billion shares on the Tokyo Exchange's First Section, jumping from Thursday's volume of 2.79 billion shares, with advancing issues pummeling declining ones by 1,694 to 120.
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