(MENAFN- AFP) Japanese stocks soared on Wednesday after the country launched a massive stimulus package to kickstart the economy, but other Asian markets were more subdued as the Federal Reserve wraps up a key policy meeting.
Prime Minister Shinzo Abe unveiled the 28 trillion yen ($266 billion) programme days before the Bank of Japan holds its own meeting that is widely expected to see it widen monetary policy.
The news comes after Abe promised to ramp up spending on the stuttering economy following Britain's shock vote to leave the EU and a landslide parliamentary election win earlier this month that solidified his power.
Promises of support from governments and central banks around the world since the Brexit ballot last month have provided the foundation for big gains across equities markets in recent weeks.
"It seems big and it should probably do quite a bit for the Japanese economy. Whether it's big enough, we'll find out. The markets seem to be a little bit undecided whether it is or it isn't," Lothar Mentel, chief investment officer at Tatton Investment Management, told Bloomberg TV.
Tokyo stocks ended the day 1.7 percent higher, while the dollar rose to 105.70 yen from 105.01 yen in the morning before the announcement.
The BoJ concludes its gathering Friday and is widely tipped to unveil fresh stimulus as the world's number three economy struggles and inflation is virtually non-existent.
But while expectations of new measures have boosted Japanese stocks and sent the yen tumbling -- helping exporters -- analysts warned of a sharp sell-off if policymakers disappoint.
"The key is whether the BoJ will surprise us again on Friday," Alex Wong, director of asset management at Ample Capital in Hong Kong, said.
It "has surprised the market several times in the past few years so they are a little bit unpredictable. There may be a disappointment" if the BoJ fails to deliver extra stimulus, he added.
- Shanghai sinks -
The immediate focus is now on the Fed, which concludes its meeting Wednesday. While it is not expected to announce any new policy measures, dealers are keen to find out its appraisal for the US economy and plans for interest rates in light of a string of positive data, including on jobs.
"In all likelihood, the Fed may take a cautious stance highlighting Brexit concerns, but there is certainly some scope for (it) to lean hawkish," said Stephen Innes, senior trader at OANDA Asia Pacific. "If not for Brexit and an outlier May (jobs report), the Fed may very well have pulled the trigger (in June).
"Since then, employment data has recovered and the US economic prints continue to beat expectations, providing the (Fed) with more than enough ammunition to provide some straight forward guidance of an impending rate hike."
While the Nikkei soared other markets stuttered. Hong Kong was flat in the afternoon and Sydney was marginally higher. Seoul and Wellington each dipped 0.1 percent.
However, Shanghai tumbled 1.9 percent following a report that China's banking regulator was looking into clamping down on the nation's $3 trillion wealth-management products market.
The 21st Century Business Herald said among measures being considered by the China Banking Regulatory Commission were limits on equities investments.
In early European trade London added 0.4 percent, Paris soared one percent and Frankfurt rallied 0.8 percent.
Regional suppliers of Apple were broadly higher after the US giant reported better-than-expected earnings for the fiscal third quarter and projected above-estimate income for the next three months.
Japan Display rose 1.6 percent in Tokyo, while Taipei-listed Hon Hai Precision added 1.4 percent and LG Display in Seoul gained 4.1 percent.
- Key figures at 0700 GMT -
Tokyo - Nikkei 225: UP 1.7 percent at 16,664.82 (close)
Hong Kong - Hang Seng: UP 0.1 percent at 22,149.66
Shanghai - Composite: DOWN 1.9 points at 2,990.00 (close)
London - FTSE 100: UP 0.4 percent at 6,748.61
Euro/dollar: UP at $1.0989 from $1.0986
Pound/dollar: DOWN at $1.3119 from $1.3132
Dollar/yen: UP at 105.70 yen from 104.64 yen
New York - DOW: DOWN 0.1 percent at 18,473.75 (close)
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