By Shani Raja and Yasuhiko Seki Dec. 1 (Bloomberg) -- The yen fell the most in seven weeks against the dollar and Japanese stocks rallied after the central bank announced an emergency policy meeting today, spurring speculation it will seek to limit the currency’s gains. The currency dropped 1.1 percent to 87.33 per dollar as of 1:19 p.m. in Tokyo, heading for its biggest slide since Oct. 15, before the Bank of Japan meets to discuss economic and financial developments. The Nikkei 225 Stock Average rose 1.4 percent to 9,475.90, as exporters including Toyota Motor Corp. climbed. Asian stocks outside Japan advanced after Credit Suisse Group AG joined Goldman Sachs Group Inc. in forecasting a 2010 rally. The Nikkei slumped 6.9 percent last month on concern that a strengthening local currency would erode export earnings just as Japan’s new government seeks to revive consumer spending in the world’s second-largest economy. Credit Suisse and Goldman Sachs predicted Asian stocks outside Japan will rally next year as earnings accelerate in South Korea and China. “News of the special BOJ meeting today is sparking expectations of possible extra credit-easing measures,” said Takashi Kudo, director of foreign-exchange sales in Tokyo at NTT SmartTradeInc., a unit of Nippon Telegraph & Telephone Corp. “This is likely causing the yen to be sold.” Japan’s currency, which reached a 14-year high last week against the dollar, weakened versus all 16 major counterparts after Kyodo News reported the central bank will consider monetary easing steps amid pressure to halt falling consumer prices. Propping Up Growth The government has stepped up calls on the Bank of Japan to prop up growth since declaring the economy was in deflation on Nov. 20. BOJ Governor Masaaki Shirakawa, who yesterday pledged to act “promptly and decisively,” has few options given that the key overnight lending rate is at 0.1 percent and the bank is already purchasing government and corporate debt. Eisuke Sakakibara, formerly Japan’s top currency official, today said the yen may rise beyond 80 per dollar by March, approaching its 1995 record, and any attempts to halt its advance through intervention will fail. “Intervention could push the yen rate two or three yen weaker for two or three days but it wouldn’t change the trend,” Sakakibara, now an economics professor at Waseda University, said today in an interview with Bloomberg News in Tokyo. Toyota Motor, the nation’s biggest carmaker, gained 2 percent to 3,510 yen and Nissan Motor Co., which gets 35 percent of its revenue from North America, rose 2.1 percent to 639 yen. Fund Raising Japanese stocks initially fell, with the Nikkei dropping 1.2 percent, as companies announced plans to raise capital by selling bonds and shares. Sumitomo Mitsui Financial Group Inc. sank 1.1 percent to 2,820 yen as its banking unit said it will sell debt. Mitsui O.S.K. Lines Ltd., which operates the world’s biggest fleet of merchant vessels, lost 2.9 percent to 469 yen after the Nikkei reported the company will sell 20 billion yen ($230 million) in bonds. Nippon Yusen K.K., the country’s largest shipping line, slumped 4.1 percent to 258 yen after the Baltic Dry Index, which measures shipping costs, fell 2.2 percent yesterday. “Valuations are probably a bit stretched,” said Alistair Thompson, who helps manage $31 billion at First State Investments in Singapore. “Capital raising efforts, not just in Japan but across Asia, are raising a lot of concern.” Stocks Outside Japan The MSCI Asia excluding Japan Index rose 0.6 percent to 404.75 after Credit Suisse set the gauge’s 12-month target at 600. Goldman Sachs yesterday forecast 650 by end-2010. Samsung SDI Co., the world’s second-largest maker of plasma displays, rose 2.8 percent after BNP Paribas SA said screen demand in China will be better than expected. Futures on the Standard & Poor’s 500 Index rose 0.1 percent. The gauge gained 0.4 percent yesterday as concerns eased about the extent of losses tied to Dubai World, the investment company seeking to delay repayment on some of its $59 billion of liabilities. Dubai World said it’s in “constructive” initial talks with banks to restructure about $26 billion in debt. The S&P/ASX 200 Index added 0.2 percent in Australia, as the central bank raised interest rates for a third straight month, to 3.75 percent, amid mounting evidence of an economic recovery. Qantas Airways Ltd. rose 3.9 percent after reporting a rise in passenger numbers. Peso Climbs The Philippine peso rose 0.4 percent to 46.99 per dollar as concern eased that Dubai World will default. South Korea’s won traded at 1,162 per dollar, near the highest in 14 months, after a government report showed exports rose for the first time in more than a year in November. The Kospi index rose 0.6 percent after the government said Korea’s overseasshipments rose 18.8 percent from a year earlier. Asian bond risk fell for a second day after surging on Nov. 27, according to credit-default swap prices. The benchmark Markit iTraxx Asia index of 50 investment-grade borrowers outside Japan fell 5 basis points to 114.5 basis points as of 8:55 a.m. in Singapore, ICAP Plc prices show. The gauge fell 13 basis points yesterday, according to Barclays Plc. Treasuries were little changed, heading for a loss in 2009 on signs of a revival in the global economy and as the U.S. prepared to announce in two days the sizes of next week’s auctions. The 10-year note yielded 3.20 percent. Gold Strength Gold for immediate delivery was little changed at $1,178.84 amid speculation that it may resume its advance as the dollar weakens. The precious metal, which has risen 34 percent this year, touched a record $1,195.13 an ounce on Nov. 26. Three-month copper futures on the London Metal Exchange traded little changed at $6,921 a metric ton on concern that a recent rally was overdone amid growing global stockpiles. Inventories in warehouses monitored by the LME rose for a 20th day yesterday, gaining 0.8 percent to 438,525 tons, the highest level since April 23. Crude oil was little changed near $77 a barrel after rising 1.6 percent yesterday as traders bought back futures contracts amid speculation credit losses in Dubai won’t derail the global economic recovery. Oil for January delivery was at $77.31 a barrel, up 3 cents. To contact the reporter on this story: Shani Raja in Sydney at sraja4@bloomberg.net;

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