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Tokyo stocks up by break as banks rally

TOKYO (AFP) – Tokyo stocks edged higher Tuesday morning with Japan s major banks extending gains, after the benchmark index hit a three-month high.

With few concrete trading cues, investors speculated over whether the Bank of Japan will launch more easing measures this month, a move that would tend to weaken the yen and boost stock prices.

In a speech Monday, Japan s central bank chief Haruhiko Kuroda left the door open to more stimulus to kickstart the weak economy.

However, he also acknowledged that the BoJ s negative rate policy — designed to spur lending and stoke growth — was hurting commercial banks profits.

And he stopped short of giving a clear signal about policymakers intentions when they hold a two-day meeting from September 20.

“It is often argued that there is a limit to monetary easing, but I do not share such a view,” Kuroda told a business forum Monday.

“There is ample room for further monetary easing in either of three dimensions — quantity, quality, and the interest rate — and other new ideas should not be off the table,” he added.

At the lunch break, Tokyo s benchmark Nikkei 225 index, which on Monday closed above 17,000 for the first time since the end of May, was up 0.22 percent, or 36.64 points, to sit at 17,074.27.

The broader Topix index of all first-section shares gained 0.48 percent, or 6.48 points, to 1,350.33.

Banks provided the biggest boost to the Nikkei on Tuesday, as some investors took Kuroda s comments about negative rates as a sign he will not cut borrowing costs further.

Sumitomo Mitsui Financial Group rose 1.52 percent to 3,725 yen while rival Mizuho rallied 0.82 percent to 183.6 yen.

Mitsubishi UFJ Financial advanced 0.22 percent to 568.4 yen.

Messaging app Line rallied 1.78 percent to 4,555 yen after announcing the launch of a new, cut-rate smartphone service.

In forex markets, the dollar was at 103.47 yen in midday trade Tuesday, nearly unchanged from 103.44 yen in Tokyo the previous day. US markets were closed for a public holiday on Monday.