TOKYO, Jan. 18 (Xinhua) -- Japan's benchmark Nikkei stock index climbed to a one-month high Wednesday after the decision of the Bank of Japan (BOJ) to stay pat on its monetary policy sent the yen lower versus the U.S. dollar.
The 225-issue Nikkei Stock Average climbed 652.44 points, or 2.50 percent, from Tuesday to close the day at 26,791.12, marking its highest closing level since Dec. 19.
The broader Topix index, meanwhile, gained 32.04 points, or 1.68 percent, to finish at 1,934.93.
Dealers here said the Nikkei's rise was based on the BOJ opting to maintain its ultra-low interest rate policy and leaving unchanged the 0.5 percent cap on 10-year Japanese government bonds (JGBs).
Some economists believed the bank may further widen the range on the cap of bonds again Wednesday, following its surprise initial widening introduced last month.
Shigetoshi Kamada, general manager at the research department at Tachibana Securities, was quoted as saying that investors had expected that the central bank would tweak its policy further and build short positions.
"The Nikkei rose today as investors bought back shares to cover short positions, and also the yen weakened against the dollar," Kamada said.
The yen dropped to the 131 level against the U.S. dollar in Tokyo after the BOJ decided to hold out on measures widely expected to be implemented ahead to tighten its ultra-loose monetary policy.
In addition to keeping the band for the 10-year JGB yield, the central bank also said it had decided to continue to set short-term interest rates at minus 0.1 percent and guide 10-year yields to around zero percent, as regards its yield curve control program.
The yen's subsequent decline versus the U.S. dollar gave exporters a lift, as overseas profits made are boosted when repatriated and overall earnings expectations increase and competitiveness is enhanced when the yen is weaker versus its major counterparts.
Among export-oriented issues gaining traction, Olympus jumped 4.8 percent, while Mitsubishi Motors accelerated 4.2 percent.
Chip-linked issues found favor, with chip-making equipment maker Tokyo Electron adding 1.7 percent.
Fellow Nikkei heavyweight Fast Retailing, operator of the Uniqlo clothing store chain, helped buoy the broader market, leaping 2.7 percent by the close.
Financial issues weighed, however, on concerns a continuation of the BOJ's ultra-loose policy could dent their earnings, with Mitsubishi UFJ Financial Group Inc. losing 0.8 percent.
By the close of play, all but one of the 33 industry sub-indexes ended higher, with the banking sector closing 0.19 percent in negative territory.
The turnover on the third trading day of the week came to 3,277.62 billion yen (25.24 billion U.S. dollars). ■