Volkswacht Bodensee - Yen drops on Japan rates outlook, stocks scatter

The BoJ has so far declined to join other central banks in hiking borrowing costs in a bid to tame rapidly-rising prices of goods and services.

The outlook for global interest rates continues to dominate market direction, with investors looking to see by how much the Federal Reserve and other central banks will keep raising borrowing costs.

"A year on from the devastating invasion of Ukraine, which shocked the world, sparked runaway inflation, and led to turbulence across global markets, investor confidence is still struggling to fully recover," noted Susannah Streeter, head of money and markets at Hargreaves Lansdown.

"Volatility is set to stay a firm feature of stock markets this year as worries about the impact of high prices continue to nag investors."

Analysts said the realisation that the Federal Reserve would further hike borrowing costs and hold them there longer appears to have sunk in among investors, who were betting on a cut by year's end as 2023 began.

That has seen equities across the globe tumble this month after rallying throughout January.

Tokyo, however, rose solidly Friday as the Bank of Japan's incoming governor Kazuo Ueda said its longstanding monetary easing policies were "appropriate".

Under current boss Karuhiko Kuroda, the bank has unleashed a raft of extraordinary ultra-loose policies -- from a negative interest rate to spending vast sums on government bonds -- in a bid to boost the sluggish economy.

The comments by Ueda, who takes the helm in April, followed data showing Japanese inflation at a four-decade high of 4.2 percent.

The figure was fuelled in part by higher energy bills, while the contrast between Fed tightening and the BoJ's easing has generally driven the yen down against the dollar, making foreign goods more expensive in Japan.

- Key figures around 1200 GMT -

London - FTSE 100: UP 0.2 percent at 7,923.93 points

Frankfurt - DAX: DOWN 0.5 percent at 15,403.67

Paris - CAC 40: DOWN 0.4 percent at 7,284.52

EURO STOXX 50: DOWN 0.6 percent at 4,234.69

Tokyo - Nikkei 225: UP 1.3 percent at 27,453.48 (close)

Hong Kong - Hang Seng Index: DOWN 1.7 percent at 20,010.04 (close)

Shanghai - Composite: DOWN 0.6 percent at 3,267.16 (close)

New York - Dow: UP 0.3 percent at 33,153.91 (close)

Dollar/yen: UP at 135.44 yen from 134.70 yen on Thursday

Euro/dollar: DOWN at $1.0577 from $1.0600

Pound/dollar: DOWN at $1.1981 from $1.2017

Euro/pound: UP at 88.26 pence from 88.17 pence

Brent North Sea crude: UP 0.5 percent at $82.58 per barrel

West Texas Intermediate: UP 0.5 percent at $75.79 per barrel

I.Meyer--BTB