A fall in Japanese exports to China in September fanned expectations that Tokyo will unveil fresh stimulus, putting pressure on the yen and helping the country's main stock market lead an Asia equities rally on Wednesday.
The latest weak trade figures add to increasing pressure on the Bank of Japan as the economy struggles to gain traction and a hoped-for pick-up in inflation fails to materialise.
It also highlights the ongoing weakness in China, a crucial driver of global growth that is expanding at its slowest annual pace in a quarter of a century.
However, while extra monetary stimulus is expected by the BoJ -- in effect printing more cash -- the dollar was unable to break away as dealers bet the Federal Reserve will delay lifting interest rates until next year.
Shipments to China slipped 3.5 percent in September, Japanese data showed, while those to other Asian countries were also down.
Export volume to the key US market was also down.
A slowdown in China's vast economy has spooked traders and a shock yuan devaluation in August precipitated a plunge in global markets that wiped trillions off valuations.
"Exports are weak across the board and that trend is expected to continue for the time being," said Taro Saito, a senior researcher at NLI Research Institute.
"While exports to Asia and China are weak, more importantly volumes to the US are slowing."
Analysts said the news will fan calls for the BoJ to ramp up its already massive bond-buying scheme aimed at inflating the Japanese economy.
- Evidence of weak economy -
"Whenever we get negative economic news, hopes for additional monetary easing move the market," Takashi Aoki, a fund manager at Mizuho Asset Management Co., told Bloomberg News.
"We’re starting to see hard evidence for our fears about the global economy being weak."
Hopes the central bank will make borrowing cheaper for investors pushed the Nikkei index 0.81 percent higher by the break, with a weaker yen supporting exporters.
Among other stock markets, Shanghai was up 0.52 percent as dealers there bet on the Chinese government introducing new measures to kick-start growth in the economy, while Seoul edged up 0.27 percent and Singapore put on 0.50 percent. However, Sydney dipped 0.50 percent.
Hong Kong was closed for a public holiday.
The dollar bought 119.94 yen compared with 119.84 yen in New York and well up from 119.44 yen earlier Tuesday in Asia.
The euro bought 136.24 yen and $1.1363 against 135.97 yen and $1.1346 in US trade. It bought 135.30 yen and $1.1328 in Asia Tuesday.
The single currency got a lift after the European Central Bank said eurozone banks reported that its own stimulus programme had led to an improvement in lending conditions for businesses.
Additional liquidity made available to banks through the ECB's bond-buying scheme, launched in March, was being used to grant loans over the past six months.
The positive report came ahead of an ECB policy meeting on Thursday that is being monitored to see if it further loosens monetary policy.