The yen plunged Wednesday to a 34-year dollar low on fervent speculation that the Bank of Japan could step into markets to support the unit, having hiked interest rates last week for the first time since the global financial crisis.

The yen dropped to 151.97 to the dollar in Asian trading hours, touching the lowest point since 1990 before strengthening somewhat in the European session.

A top Bank of Japan official indicated that it would press ahead with a loose monetary policy, even after it pulled the plug on its ultra-aggressive monetary stimulus programme to deliver its first hike in borrowing costs since 2007.

The weaker yen helped spur a rally in Tokyo's benchmark Nikkei stocks index as exporters benefited, making it Asia's best performer.

Other global stock markets diverged before this week's US data, which is expected to shed light on the outlook for Federal Reserve interest rates.

World oil prices meanwhile trod lower on signs of weakening demand in major consumer the United States.

- Traders 'will need more' -

"After hitting its highest since 1990, the yen slackened a bit overnight on the comments but has not budged much and the market will need more," said analyst Neil Wilson at trading firm Finalto.

"Usually in these situations the market will test how far Tokyo is prepared to let it go."

Earlier in the day, BoJ board member Naoki Tamura said officials would not embark on a speedy programme of monetary tightening as they try to nurture an economic recovery while keeping a lid on inflation.

"The handling of monetary policy is extremely important from here on for slow but steady progress in normalisation to fold back the extraordinarily large-scale monetary easing," he said, according to Bloomberg News.

Finance Minister Shunichi Suzuki said the government was watching the situation closely and vowed to act if necessary.

"We're monitoring market movements with a high sense of urgency. We will take resolute action against excessive moves, without ruling out any options," he told reporters.

Global markets diverged Wednesday with investors on tenterhooks before key US data releases this week, including the Federal Reserve's preferred gauge of inflation and the looming corporate earnings season.

Hong Kong, Shanghai, Seoul, Jakarta and Wellington were down, while Sydney, Singapore, Taipei, Mumbai, Bangkok and Manila clung onto gains.

In Europe, London registered a modest loss while Frankfurt and Paris held onto positive territory.

The mixed performance followed another soft day on Wall Street with observers warning the latest equities rally may have run out of steam.

  Key figures around 1130 GMT 

 Dollar/yen: DOWN at 151.21 yen from 151.53 yen on Monday

Euro/dollar: DOWN at $1.0827 from $1.0833

Pound/dollar: UNCHANGED at $1.2628

Euro/pound: DOWN at 85.74 pence from 85.78 pence

Tokyo - Nikkei 225: UP 0.9 percent at 40,762.73 (close)

Hong Kong - Hang Seng Index: DOWN 1.4 percent at 16,392.84 (close)

Shanghai - Composite: DOWN 1.3 percent at 3,993.14 (close)

New York - Dow: UP 0.1 percent at 39,282.33 (close)

London - FTSE 100: DOWN 0.3 percent at 7,907.71 points

Paris - CAC 40: UP 0.1 at 8,196.12

Frankfurt - DAX: UP 0.3 percent at 18,446.39

EURO STOXX 50: UP 0.3 percent at 5,079.22

Brent North Sea Crude: DOWN 0.6 percent at $85.70 per barrel

West Texas Intermediate: DOWN 0.7 percent at $81.06 per barrel