* Dollar/Yen slumps almost 3 percent as BOJ dashes stimulus
hopes
* 3.6 percent loss for Nikkei leads world stocks lower
* Bond yields head lower after Fed signals steady rate path
* Oil prices hold near 2016 high
By Marc Jones
LONDON, April 28 (Reuters) - A lack of fresh stimulus from
the Bank of Japan sent the yen soaring and world stocks into the
red on Thursday, half a day after the U.S. Federal Reserve
signalled it too was hitting the policy pause button.
The yen JPY= surged almost 3 percent against both the
dollar and the euro in a sharp reaction to the BOJ inaction,
putting it on course for its biggest jump against the greenback
since February and in five years against the euro. EURJPY=
Tokyo's Nikkei .N225 had slumped 3.6 percent by the time
it closed and the pan-European FTSEurofirst 300 dropped 0.6
percent. Disappointing earnings from plane maker Airbus AIR.PA
and Spain's second biggest bank BBVA (MC:BBVA) added to the gloom. .EU
The BOJ's decision to hold steady in the face of soft global
demand and a rise in the yen was particularly jarring for
markets after media reports ahead of the meeting said it wanted
to go deeper into negative interest rates.
On the key element of the speculation, applying sub-zero
rates to the BOJ's main bank lending programme, governor
Haruhiko Kuroda spelled it out clearly.
"I know such a programme is adopted by the ECB (European
Central Bank) ... At this stage, we don't have any plans to
consider this option. This wasn't discussed at today's meeting,"
he said.
"The market was expecting something from the BOJ and they
did not deliver so the market has basically wiped out all the
rally in dollar/yen of the last couple of weeks," said Societe
Generale FX strategist Alvin Tan.
"For the last 2-3 years the big theme in the market was
monetary divergence. But in the last few months the legs have
really been cut off that... so currencies are all over the
place."
KIWI FLIES, GOLD SHINES
The New Zealand dollar NZD=D4 was rallying hard too, up
almost 2.5 percent, after the Reserve Bank of New Zealand
(RBNZ)also wrongfooted traders by skipping a chance to cut its
interest rates again.
In bond markets, the flight from the volatility elsewhere
and the growing sense that U.S. rates are staying put for a good
while longer, overcame the Japanese angst to push benchmark Bund
and Treasury yields lower. EUR/GVD
"The Fed didn't mention June at all, meaning that if they
skip that, it will be September which is close to the election,
so we are talking December now," said Soeren Moerch, head of
fixed income trading at Danske Bank. "That is a very big relief
for fixed income markets."
There was a smattering of encouraging news too from Germany
as unemployment remained at a record low in April
and the head of Volkswagen (DE:VOWG_p) said its first quarter sales had been
encouraging despite its diesel emissions scandal.
Commodity markets were having a remarkably quite day by
their recent standards considering all the currency turbulence
going on. O/R GOL/
Brent crude was barely budged from 2016 highs hit on
Wednesday at $47.19 per barrel as U.S. West Texas Intermediate
(WTI) CLc1 hovered at $45.30 a barrel. Oil has surged 65
percent since mid-January.
Gold XAU= , meanwhile reversed overnight losses to climb to
$1,255 an ounce, its highest level in a week as traders took
advantage of the fall in the dollar, the shiny stuff's
underlying currency.
"The longer the Fed holds off on raising rates, the better
for gold," said HSBC analyst James Steel.