Asian markets edge higher As BOJ defends ultra-slow stance

HONG KONG Japanese shares led gains in Asian stocks on Tuesday, as the Bank of Japan defended its ultra-slow stance, while oil fell due to fears of lower demand.

Japan's Nikkei gained 0.91 percent in early trade, while MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.64 percent.

The BOJ pledged to keep monetary policy ultra-loose, by buying unlimited government bonds for the first four days of the week, to prevent yields in Japan from rising as they are doing elsewhere after the US Federal Reserve hiked interest rates in the face of mounting inflationary pressures.

Even after the central bank made a rare move to step into the market for a second day, Japan's 10 year government bond yields hovered near the 0.25 percent upper limit of the Bank of Japan's yield target.

The trading was choppy. He added that there is not really a medium-term direction that the market is following, and that investors will favor markets that are lagging behind the Fed's rate hike, trading on a day to day trading mentality and market noises and short term development.

The BOJ's action left the yen fighting for footing after its worst session in 16 months.

The Japanese currency fell by as much as 2.4 percent to 125.10 to the dollar overnight, its lowest since August 2015, before recovering to 124.24 in volatile morning trade in Tokyo.

On Tuesday, oil weakened further. The US crude fell 1.04 percent to $104.86 per barrel and the price of the US dollar was at $111.09, down 1.24 percent on the day.

Australia S&P ASX 200 slid 0.8 percent in early trading despite stronger than expected retail sales data.

The yield on US benchmark 10 year treasury notes was steady at 2.4696 percent, little changed on the day due to a pause in the sell-off seen in recent days.

The US Treasury yield curve was inverted on Monday for the first time since early 2006, as measured by the gap between five and 30 year yields.

The Fed acknowledges that there is an economic recession risk down the road, and I think that is a macroeconomic signal. I think the recession is not in everyone's mind at this point. It is on the radar, BNP spokesman Lo said.