LONDON — Japan's stock market once again outperformed on Monday after officials from the world's leading industrial economies refused to criticize the Bank of Japan's super-easy monetary policy and the massive depreciation in the value of the yen it triggered.
The Nikkei's advance on Monday contrasted with the performance of many other indexes in Asia, the U.S. and Europe. Investors elsewhere had been spooked by somewhat disappointing retail sales and industrial production data from China, the world's second-largest economy.
However, fairly solid U.S. retail sales figures, showing a 0.1 percent monthly rise in April against an expected 0.3 percent decline, helped brighten the mood later in the day.
"April's retail sales report is another example of a generally weak report that is better than expected, so it's perceived to be a positive," said Jim Baird, chief investment officer for Plante Moran Financial Advisors.
Hopes over the U.S. economy have lain behind the upbeat market mood this year, alongside a seeming easing in Europe's debt crisis and continued monetary support by the world's leading central banks. Many indexes, including Germany's DAX and the Dow in the U.S., have struck a series of all-time highs in recent weeks, while others, such as the Nikkei, have hit multi-year peaks.
On Monday, the DAX ended flat at 8,279.29 while the FTSE 100 index of leading British shares rose 0.1 percent to 6,631.76. The CAC-40 in France shed 0.2 percent to 3,945.20.
In the U.S., the Dow Jones industrial average was down 0.2 percent at 15,093.53 while the broader S&P 500 index was flat at 1,634.33.
In Asia, the Nikkei jumped 1.2 percent to 14,782.21, its highest close since December 2007. The index has soared more than 42 percent since the beginning of the year as the yen dropped sharply in response to the Bank of Japan's aggressive monetary stimulus program.
Prime Minister Shinzo Abe, elected late last year on promises to revive the world's third-largest economy, has implemented a policy mix of increased public spending and aggressive monetary easing to end the country's two decades of economic stagnation.
One byproduct of the policy has been a sharp drop in the yen — increasing the amount of yen in the financial system dilutes its value. For Japan, the yen's drop is a potential boon to growth as it makes exports cheaper; also, for a country that's seen prices fall for much of the past 15 years, a falling yen is positive as it makes imports more expensive.
Last week, the dollar rose above 100 yen for the first time in over four years. On Monday, the dollar was down 0.1 percent at 101.84 yen but earlier — during Asian trading hours — it had risen above 102 yen.
Japan was a talking point at a weekend meeting of financial representatives from the Group of Seven leading developed economies. All refrained from criticizing the Bank of Japan's policy, and accepted that its motivation was to get demand growing, not to weaken the yen.
However, with U.S. Treasury Secretary Jacob Lew indicating that he's monitoring developments with regard to the yen, the issue may be revisited at the wider G-20, when the leading industrial economies are joined by developing nations.
"This accepting tone could well change if the yen were to decline further which seems likely and is unlikely to be the end of the matter, especially if China and South Korea become more vocal with their concerns about the yen's rise and its effects on their exports," said Michael Hewson, senior market analyst at CMC Markets.
Elsewhere in Asia, Australia's S&P/ASX 200 rose 0.1 percent to 5,210.30 and South Korea's Kospi rose 0.2 percent to 1,948.70. Hong Kong's Hang Seng fell 1.4 percent to 22,989.81.
Mainland Chinese shares were mixed as government data showed slightly smaller-than-expected increases in industrial production and retail sales in April. The Shanghai Composite Index fell 0.2 percent to 2,241.92. The smaller Shenzhen Composite Index rose 0.3 percent to 974.20.
Aside from the Japanese yen's movements, the currency markets were steady, with the euro 0.1 percent lower at $1.2984.
Oil prices tracked equities lower, with the benchmark New York rate down $1.09 to $94.95 per barrel in electronic trading on the New York Mercantile Exchange.