* Yen gains expected to be short-lived * BOJ makes open-ended commitment to buy assets from 2014 * BOJ doubles inflation target to 2 percent * Euro rises versus dollar; German investor sentiment up sharply in January * Stocks mixed, Treasuries turn higher after weaker U.S. home sales By Ellen Freilich NEW YORK, Jan 22 The yen rose to a three-day high against the dollar on Tuesday after the Bank of Japan said its open-ended commitment to buy assets would kick in only next year, disappointing those who expected more aggressive monetary easing. Global stock markets were mixed, with Japanese equities and world indices higher on the BOJ news but Europe slightly lower. U.S. markets were mostly higher. The euro pared sharp losses against the yen and was last little changed against the dollar after a German ZEW survey showed economic sentiment at its highest since May 2012. Japan's central bank, which has been under intense political pressure to overcome deflation, doubled its inflation target to 2 percent, as had been widely expected. It also said it had decided to switch to an open-ended approach of buying a certain amount of assets each month next year, without setting a deadline for completing the purchases. "The yen strengthened after weakening since mid-November in anticipation of the BOJ's plan to set a target of 2 percent for inflation and do unlimited quantitative easing until it gets there," said Jonathan Garber, macro analyst at Briefing.com in Chicago. Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington, said "the medium trend lower for the yen remains intact." The dollar was down 0.8 percent against the yen at 88.88 . Earlier it had fallen past reported stops at 88.50 yen to hit a session low of 88.35 yen. About $3.4 billion in yen changed hands through the global session on Tuesday, using Reuters Dealing data. Current BOJ Governor Masaaki Shirakawa's term ends in April and markets are positioned for further yen weakness as most expect him to be replaced by someone whose stance on aggressive policy easing matches that of Prime Minister Shinzo Abe. EURO RECOVERS The euro was down 0.9 percent on the day at 118.26 yen, though off a session low of 117.31 yen. The euro was hurt against the yen by a German newspaper report saying Germany's regulator had ordered large banks to simulate a break-up. Against the dollar, the euro stood at $1.3297. While the euro has struggled to break above the $1.34 level since it hit a near 10-month high a week ago, strategists said it would likely stay firm as concerns around the euro zone crisis ease. The German ZEW figures beat all expectations, a sign that the euro zone crisis was no longer hitting Europe's largest economy as hard as it did last year. But Douglas Cote, chief market strategist at ING U.S. Investment Management, with $170 billion in assets under management, said the euro's rise since the start of the year is a problem for the euro zone and the global economy. "Europe has a growth crisis and this race by central banks to ease gives Europe much less room to do the same," he said. "Their currency is rising at the absolute worst possible time, hurting its global competitiveness." That could U.S. corporations' earnings growth, Cote said. "Half the revenues of U.S. corporations are from overseas and if important economies like Europe have serious problems, overall S&P 500 Q4 earnings growth expectations - at about 2 percent - could very easily be a miss," he said. "That would not bode well for stock prices." U.S. housing data has surprised on the positive side over the last few months, but news that U.S. existing home sales fell in December put some pressure on stock prices - which were mixed - and caused safe-haven U.S. debt to erase early losses. Analysts said stock investors held back on making large bets before a batch of corporate earnings. Both the Dow and S&P 500 closed at their highest levels since December 2007 on Friday, spurred by a strong start to earnings season. U.S. markets were closed on Monday. Around midday, the Dow Jones industrial average was up 29.03 points, or 0.21 percent, at 13,678.73. The Standard & Poor's 500 Index was up 1.21 points, or 0.08 percent, at 1,487.19. The Nasdaq Composite Index was down 4.98 points, or 0.16 percent, at 3,129.72. This is a busy week for U.S. earnings, with Google Inc , IBM, and Texas Instruments all on tap to report on Tuesday. Tech earnings will be a particular focus after a disappointing sales outlook from Intel Corp last week. The benchmark 10-year Treasury note was up 1/32, yielding 1.84 percent. European shares, testing two-year highs in recent days, were choppy as markets latched onto a report that German regulators were simulating a separation of some banks' operations, and on rumors - later denied - that Deutsche Bank was preparing a profit warning. Frankfurt's DAX fell as much as 1.4 percent on the talk but then erased about half of that loss. The pan-European FTSEurofirst 300 was down just 0.1 percent at 1,165. The MSCI world index was up 0.1 percent. Brent crude rose 0.47 percent to $112.23 a barrel, and gold stood at $1,694.41. Growing confidence in the strength of China's economic recovery pushed copper up 0.8 percent to $8,120 a tonne. Bond market investors also gobbled up a new 10-year Spanish bond, its first since November 2011, as the latest evidence of rising confidence following the European Central Bank's promise to buy Spain's bonds if necessary.
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