The Bank of Japan surprised markets Friday with only minor tweaks to its giant stimulus plan that reignited concerns its monetary policy arsenal is almost empty. Tokyo's Nikkei 225 stock index dropped and the yen surged as the underwhelming changes burst hopes for a one-two punch to boost the sluggish economy -- after the government unveiled a huge spending package this week. Japanese officials are under intense pressure to deliver as the fate of Prime Minister Shinzo Abe's faltering bid to reignite the world's number three economy, dubbed Abenomics, looks increasingly gloomy.
By Leika Kihara TOKYO (Reuters) - The Bank of Japan expanded stimulus on Friday by doubling purchases of exchange-traded funds (ETF), yielding to pressure from the government and financial markets for bolder action, but disappointing investors who had set their hearts on more audacious measures. At the two-day rate review that ended on Friday, the BOJ decided to increase ETF purchases so its total holdings increase at an annual pace of 6 trillion yen ($58 billion), up from the current 3.3 trillion yen. The dollar fell more than a full yen on Friday at one point to as low as 102.825 and the Nikkei average tumbled nearly 2 percent, after the BOJ's decision fell short of expectations.