Japanese Shares hit 34-year High as Yen Stabilizes

Japanese stocks rose to new 34-year highs, and the yen held steady on January 22, as investors hoped the Bank of Japan would not rock the boat by abandoning its ultra-easy policy anytime soon, while Chinese stocks fell further after a brutal session.

Japan's Nikkei climbed 0.6% to its highest level since February 1990, bringing the year-to-date gain to 9.9%. Meanwhile, MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.2%, but is still down more than 6% this year due to the fall in Chinese stocks.

The yen remained at 148.12 per dollar, having fallen 5% this year.

The BOJ is expected to retain its ultra-easy monetary settings later in the day, as policymakers assess the progress made by the economy towards meeting the conditions for phasing out the decade-long accommodative policy.

None of the economists polled by Reuters expect the central bank to end its negative rate policy this time, though many see it happening in April. Governor Kazuo Ueda will hold a press conference after the decision, with traders focusing on the inflation outlook and any signs of imminent policy change.

"The market will probably be disappointed again because we don't believe that Ueda will give a clear signal of policy normalisation in the near future," said Robert Carnell, regional head of research, Asia-Pacific, at ING.