The Bank of Japan said that it would lend up to $33 billion to commercial banks in a new loan scheme aimed at redirecting money to industries with growth potential, but analysts doubt its effect in supporting the fragile economic recovery.
Details of the scheme, including the 3 trillion yen ($33 billion) cap came as little surprise to many market players, although some analysts warn that by providing support to specific industries, the Bank of Japan may be moving too close to the realm of fiscal policy.
The scheme will target loans to 18 industries ranging from those related to the environment, medicine, agriculture and tourism, the central bank said.
Many analysts expect the loan scheme will have little positive effect on the economy due to a lack of fund demand from companies, who are reluctant to invest heavily due to uncertainty about the outlook.
Meanwhile Japan's Nikkei average edged up 0.1 per cent to stall near a key resistance level on Tuesday, buoyed as the impact of Greece's downgrade to junk status ebbed, with securities firms also providing a boost.
But trade was light and rises hard won, with market players saying it was still too early to say that the benchmark is in a rising trend.
The benchmark Nikkei hovered close to 9,900 for most of the trading day, a key resistance level just above its 25-day moving average, with sights set on the next resistance at 10,000 after the market broke sharply below that in late May.
The Nikkei inched up 8.04 points to 9,887.89 after briefly rising as far as 9,911.73, having last traded above its 25-day moving average in late April. The broader Topix was flat at 878.83.
But volume, although above Monday's four-month low, was thin with around 1.5 billion shares traded, which market players attributed to China being closed for a holiday that lasts through Wednesday.
REUTERS