LONDON, Oct 11: The yen remained under pressure on Friday after an announcement by the Bank of Japan that it would spend $16.1 billion to buy stocks held by Japanese banks, which disappointed investors who had been hoping for a bigger bail out.

The dollar held steady against the euro on Friday ahead of keenly awaited US data and following strong gains in US equity markets on Thursday.

The single European currency nudged up to $0.9868 from 0.9862 late on Thursday in New York.

The dollar rose to 124.16 yen from 123.57.

The Bank of Japan (BoJ) said it would spend $16.1 billion by September 2003 to buy stocks held by Japanese banks.

Fears that falls in share prices would put more financial pressure on already beleagured banks prompted the BoJ last month to controversially announce it would buy shares from banks to shore up their weak balance sheets.

But the amount of the share purchases announced Friday was described as inadequate by Jesper Koll, chief economist at Merrill Lynch Japan.

Banks’ cross-shareholding unwinding runs at two per cent of market capitalization (a year), so they’re absorbing slightly less than half (the five trillion yen) of unwinding, Koll added.

ABN Amro currency strategist Aziz McMahon said the Japanese unit had fallen back ahead of the BoJ’s announcement following disappointment at the anaemic response of Japanese equities to Thursday’s surge in US stock prices.

Meanwhile, the dollar was steady against the euro ahead of the latest readings on the health of the US consumer, US retail sales and consumer confidence data, later Friday.

But WestLB currency strategist Michael Klawitter said while the retail sales numbers were important, the fact the market was already anticiptaing a weak figure could limit potential damage both for US stocks and the dollar.

He warned that the dollar could be vulnerable to the University of Michigan consumer sentiment index, however, given the danger that it was badly affected by the recent slump in stock prices.

Klawitter added that third quarter earnings from giant US industrial conglomerate Gleneral Electric would also be of interest to currency dealers, given the figures’ potential to impact stock prices.

The euro was changing hands at $0.9868 against 0.9862 late on Thursday in New York, 122.50 yen (123.57), 0.6318 pounds (0.6302) and 1.4644 Swiss francs (1.4635).

The dollar was being quoted at 124.16 yen (123.57) and 1.4832 Swiss francs (1.4808).

The pound was at 1.5626 dollars (1.5643), 193.98 yen (193.24) and 2.3176 Swiss francs (2.3202).

On the London Bullion Market, the price of an ounce of gold eased back to $317.50 from 318.95 late on Thursday. —AFP