By Dominic Lau
TOKYO (Reuters) - Japanese shares rose and the yen fell after a report on Tuesday said Prime Minister Shinzo Abe is considering a corporate tax cut to help offset the impact of a planned two-stage increase in the sales tax, while gold eased but held near three-week highs.
Abe is trying to spur growth and pull the world's third-largest economy out of 15 years of deflation with expansive fiscal and monetary policies, dubbed as "Abenomics".
The Nikkei newspaper quoted government sources as saying Abe has called for a study on lowering the corporate tax rate as a way of easing the burden on Japanese companies and attracting foreign investment.
"The media report on Abe's move to consider lowering the corporate tax is positive for the stock market," said Mitsushige Akino, a fund manager at Ichiyoshi Asset Management.
Tokyo's Nikkei share average climbed 1.4 percent in light volume, rebounding after it fell to its lowest since end-June following Monday's slower-than-expected GDP data.
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The yen slipped 0.4 percent to 97.240 yen to the dollar, pulling further away from a seven-week high of 95.810 touched last week.
Driven by hopes of Abenomics, the benchmark Nikkei has risen 32 percent this year, while the yen has fallen 12 percent versus the dollar.
USEFUL LINKS:
Japan machinery orders: https://bsmedia.business-standard.comlink.reuters.com/bek95s
Global manufacturing PMI: http://link.reuters.com/bav32v
Asia money & markets: http://link.reuters.com/var99t
DOLLAR STEADY BEFORE DATA
Against a basket of major currencies, the dollar was up 0.1 percent, extending gains into a third day in anticipation that U.S. data will point to the Federal Reserve rolling back its $85 billion monthly stimulus programme sooner rather than later. The next test of this view will be Tuesday's retail sales data, which most expect to be strong.
"Better economic data from China last week has left Asia ex-Japan with a positive tone. Now it will be the turn of the U.S. to show what it can do with some retail therapy," Societe Generale wrote in a note.
Asian shares as measured by MSCI Asia-Pacific ex-Japan index rose 0.4 percent to a two-week high, extending Monday's gain on the back of last week's upbeat Chinese factory output data, while South Korean shares advanced 0.9 percent.
In the commodities markets, copper prices added 0.2 percent to around $7,265 a tonne, after slipping 0.3 percent on Monday. Gold eased 0.1 percent after surging as much as 2.2 percent to a three-week high on Monday.
Brent crude prices edged up 0.1 percent to just above $109 a barrel, extending the previous session's 0.7 percent rise to a one-week high on concerns over supply disruption from Libya.
(Additinal reporting by Hideyuki Sano and Ayai Tomisawa in TOKYO; Editing by John Mair and Richard Borsuk)