Nikkei index closed higher after BoJ adjusted its yield curve control policy

Japan’s Nikkei index rose on Tuesday after the Bank of Japan increased flexibility in controlling the yield curve while maintaining its stimulus policy.

The Nikkei index closed 0.53 percent higher at 30,858.85 points. The broader Topix index rose 1.01 percent.

Financial sector stocks recorded the largest gains, as the insurance companies index on the Tokyo Stock Exchange rose 2.65 percent, topping the gains among 33 sub-indices. The banking sector index rose 2.21 percent.

Rising long-term bond yields and a steeper yield curve would improve the outlook for returns from lending and investing.

The Bank of Japan supported equity investors by setting the reference point for the 10-year government bond yield ceiling at 1 percent instead of the fixed maximum.

The Nikkei index ended the morning session down 0.15 percent after a Nikkei newspaper report indicated that the central bank is considering raising the yield ceiling. The Bank of Japan’s announcement came at the end of the mid-day break on Tuesday.

Technology stocks remained an obstacle to the Nikkei index, as chip-related stocks followed their American counterparts, which fell overnight, and Panasonic shares declined due to disappointing profits.

Advantest, a maker of chip testing equipment, caused the Nikkei Index’s biggest losses, by 50 points, as the stock fell 4.67 percent.

Panasonic shares recorded the largest percentage loss on the Nikkei index so far, falling 8.91 percent after lowering profit expectations for its electric car battery unit.

Of the 225 stocks on the Nikkei index, 178 rose and 45 declined, while two stocks remained little changed.