Asian shares rebounded from earlier losses and the yen fell on Wednesday after the Bank of Japan eased monetary policy further, following the U.S. Federal Reserve's aggressive stimulus, but concerns remained about fiscal strains in Spain and deteriorating corporate profits.
The BOJ eased monetary policy by once again boosting its asset purchase program, as slowing global demand and heightening tensions with China hurt chances of a near-term recovery in the export-reliant economy.
The yen slipped to a one-month low around 79.10 from around 78.66 yen and the Nikkei stock average <.N225> jumped to 1.3 percent from a 0.5 percent gain prior to the BOJ announcement.
The move came in the wake of the Fed launching a third round of bond buying known as quantitative easing (QE) last week and after the European Central Bank earlier this month outlined its bond-buying scheme to ease fiscal strains for euro zone countries seeking assistance.
"The BOJ had to move after the Fed and the ECB took action, and market reactions reflect such sentiment," said Hiroshi Maeba, head of FX trading Japan for UBS in Tokyo.
He expected the dollar to keep its gains and if the dollar breaks above a technical level of 79.30 yen, it has further scope to the upside.
"Along with the Chinese factor, the Nikkei faces downside risks as global equities look vulnerable to adjustments from the post-Fed rally, and it's possible for the BOJ to pre-emptively step in to bolster sentiment ahead of the fiscal half, where the level of stock prices is crucial for companies," said Yuji Saito, director of foreign exchange at Credit Agricole in Tokyo.
Riskier assets, which spiked after the Fed's move, have consolidated this week as investors now contemplate whether global central bank stimulus efforts can revive demand.
A Thomson Reuters/INSEAD survey on Wednesday underscored such concerns, showing business sentiment among Asia's top companies fell for the second straight quarter, dragged down by export-orientated economies such as China and Japan, while domestic spending helped boost Southeast Asia's outlook.
MSCI's broadest index of Asia-Pacific shares outside Japan <.MIAPJ0000PUS> gained 0.6 percent after trading flat to down as much as 0.2 percent earlier in the session.
U.S. stocks ended flat to slightly lower while European shares fell on Tuesday as Spain kept skirting around a decision on whether to seek an European Union bailout, which is conditional for the European Central Bank to start buying the country's bonds to tame its borrowing costs.
The euro rose 0.2 percent to $1.3068.
"It's probably not the start of a new downturn, but I do wonder whether the markets very quickly discounted the ECB and the Fed and now back to looking at the same old question that is Spain - will they or won't they ask for a bailout and what kind of conditions would be applied to it. And whether the U.S. economy can get out of the 1.5-2 percent growth range," said Adrian Foster, head of financial markets research for Asia-Pacific at Rabobank International in Hong Kong.
"I doubt those questions are going to get answered anytime soon, so maybe a one-off repricing as a result of the ECB and Fed action, and then beyond that, we are back at the whims of going up and down 1-2 percent a day," Foster said, adding that the liquidity pumped in by central banks amplify market swings as it remains in the financial system rather than trickling into the real economy.
U.S. Treasury bond prices rose on Wednesday on bargain hunting from last week's sharp sell-off and renewed bids for safe-haven assets, as concerns grow over global growth slowdown while Spanish yields stayed under upward pressures on the uncertain outlook for Spain's fiscal woes.
Commodities regained ground in choppy trade, with London copper up 0.4 percent to $8,354 a metric ton.
Oil futures also rose, with U.S. crude up 0.8 percent to $96 a barrel and Brent crude adding 0.5 percent to $112.56.
Spot gold steadied at $1,772.63 an ounce.
(Editing by Michael Perry & Kim Coghill)