Asian shares flat, yen hits 2-week high ahead of BOJ

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TOKYO, July 29 (Reuters) – Asian shares held near one-year highs while the yen hit a two-week high on Friday in nervous trade as investors waited to see if the Bank of Japan will come up with stimulus that would meet markets’ expectations.

MSCI’s broadest index of Asia-Pacific shares outside Japan was flat in early trade while Japan’s Nikkei slipped 0.1 percent.

The yen rose to as high as 103.30 to the dollar from 105.30 in late U.S. trade on Thursday, though market players said large moves were likely a result of “fat finger” orders exacerbated by thin trading conditions as there was no apparent news to justify such big moves.

The yen last stood at 104.76, with all eyes on the BOJ’s policy decision, which is usually announced some time between 0230 GMT to 0500 GMT.

The Japanese government, which is crafting a fiscal stimulus package, has been lobbying hard for the BOJ to ease policy further and has prepared a statement it will publish in case the central bank eases.

“As the government is preparing a supplementary budget, the BOJ is perhaps feeling that they could maximize the impact of what little easing it can do by synchronising their moves,” Daisuke Nomoto, senior portfolio manager at Columbia Threadneedle Investments in Boston.

Yet many investors also say there is a big chance of disappointment because markets have long expected more stimulus, making it difficult for BOJ Governor Haruhiko Kuroda to spring a surprise.

The BOJ is widely expected to expand its stimulus further by increasing its already massive asset purchases and cutting interest rates deeper into negative levels.

Global share prices have recovered from the shock from Brexit vote in late June partly because of expectations that the central banks in major developed economies will take steps to support their economies.

Wall Street shares stood near all-time highs, with tech heavyweights Alphabet and Amazon rising after the bell following their earnings.

European shares fell on Thursday however, a day before the scheduled release of the European stress test results on banks on Friday night.

The euro stood little changed at $1.1085,

Elsewhere, oil prices fell to three-month lows, with U.S. benchmark now down more than 20 percent from this year’s peak on growing worries that the world might be pumping more crude than needed.

U.S. crude futures fell to as low as $40.95 per barrel and last stood at $41.02, down 12 cents.

International benchmark Brent crude futures dropped 9 cents to $42.61, its lowest since mid-April.