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Tokyo stocks open up 1.13% after Fed stimulus decision

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(Globalpost/GlobalPost)

Tokyo stocks opened 1.13 percent higher on Thursday after the US Federal Reserve surprised markets by leaving its massive stimulus drive unchanged, pushing Wall Street to record highs.

The benchmark Nikkei 225 index gained 164.56 points to 14,669.92 at the open, while the dollar lost ground against the euro and the yen in forex trading.

The early gains on Japan's premier exchange came after US stocks soared to all-time closing highs as the Fed left its huge monetary stimulus in place following a two-day policy meeting.

The Dow Jones Industrial Average jumped 0.95 percent to a record 15,676.94, while the broad-based S&P 500 surged 1.22 percent to 1,725.52, also beating its previous high.

"The Fed's decision struck as a mild surprise, as many had come to expect at least a modicum of tapering," said Tachibana Securities market advisor Kenichi Hirano.

The Fed decided not to dial back its $85 billion per month bond-buying program. Many market players had expected the central bank to trim its quantitative easing programme by $10-$15 billion per month.

A drawdown on the scheme would be viewed as confirmation the world's biggest economy had cemented a turnaround.

But Fed policy makers cut their growth forecast for this year and next, and said they wanted to further gauge the impact of ongoing government spending cuts and a spike in interest rates in the past four months on the economy.

The US monetary easing programme has been credited with helping prop up global equity markets.

"The net effect on Japan shares will be double-edged; on the one hand, additional short-term enthusiasm for equities generally will be a plus, but the dollar's weakness will naturally work to undermine confidence, at least short-term," Hirano said.

"After Wednesday's runup, many players will no doubt use this opportunity to take profits."

The dollar slipped in Tokyo currency trading Thursday morning with the unit trading at 98.10 yen, from 98.13 yen overnight in New York and 99.19 yen in Tokyo.

The euro rose to $1.3525 from $1.3511 while changing hands at 132.69 against 132.55 yen.

-- Dow Jones Newswires contributed to this story --

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http://www.globalpost.com/dispatch/news/afp/130918/tokyo-stocks-open-113-after-fed-stimulus-decision-0