By PAMELA SAMPSON
BANGKOK (AP) â¿¿ Asian stock markets rose Thursday with the help of Japan's Nikkei 225, which was propelled higher by a weakening yen. A new bond-buying program by the U.S. Federal Reserve and commitment to keep interest rates low also soothed investor nerves about the state of the world's biggest economy.
Following a two-day policy meeting, the Fed said Wednesday it will keep spending $85 billion a month on bond purchases to drive down long-term borrowing costs and stimulate economic growth. The Fed will spend $45 billion a month on long-term Treasury purchases to replace "Operation Twist," a previous bond-purchase program of an equal size. And it will keep buying $40 billion a month in mortgage bonds.
Those purchases, and the Fed's revamped commitment to keep interest rates low until unemployment falls to a more normal level, are intended to spur borrowing and spending in an economy still growing only modestly since the financial crisis of 2008.Tokyo's Nikkei 225 index jumped 1.5 percent to 9,728.15 as the yen sank to an eight-month low against the dollar, a boost for Japan's export reliant economy. Hong Kong's Hang Seng was 0.1 percent higher at 22,530.20. South Korea's Kospi added 0.4 percent to 1,983.77. Australia's S&P/ASX 200 gained less than 0.1 percent at 4,587.50. Wall Street finished little changed despite the Fed's announcement as critical budget negotiations in Washington appear to have stalled. Without a budget agreement between President Barack Obama and Republican lawmakers, a combination of steep automatic tax hikes and government spending cuts will go into effect in 2013, threatening to throw the U.S. economy into recession. Even if an agreement can be reached, the halting pace of negotiations is jeopardizing chances that it could be written into proper legislative form and passed through both House and Senate before the new Congress convenes on Jan. 3.