The day after the historic victory of the opposition Democratic Party of Japan in general elections, the yen hit a seven-week high against the dollar and the Nikkei stock index jumped to the highest intraday level of the year.
Asian stocks jumped to a two-month high, dragging European shares in their wake, as markets responded positively to US Treasury Secretary Timothy Geithner's plan to rid banks of toxic assets.
Nikkei closed up 5.12%, buoyed by continuing gains on Wall Street, after the Nikkei slipped to 26-year lows last week. The Japanese government announced last month it is to launch another stimulus package.
Tokyo's main index, the Nikkei, fell around 3 % on Friday while the Topix reached a 25-year low. Asian markets were responding to lows on Wall Street after GM announced it may file for bankruptcy.
Wall Street limped to a lower finish Tuesday, although it saw less of a slide than in Europe, as investors mulled the extent of the economic gloom a day after a global rout that sent key US indexes to fresh 12-year lows.
After a small breeze of optimism at the opening, at midday European stocks were slightly in the red as they struggled to make some gains. Tokyo's Nikkei dropped by 1%, coming close to its lowest point since 1982.
Asian stocks tumbled as bad news of economic contraction continued to flow. Tokyo's Nikkei fell by 3.81% amid uncertainty surrounding the US bank sector and the volatility of the dollar's value. Australia's market hit a low unseen since 2003.
Asian markets bounced back on Wednesday, spurred by a late surge on Wall Street. Investors continued to shun the yen, however, amid growing fears about Japan's political troubles and stalling economy.
Europe's main stock markets continued falling after opening trade on Tuesday, following Japan's Nikkei slump to a near 26-year low and Wall Street's dip to a 12-year low overnight.
