Japan's Nikkei recoups early losses on report of new government stimulus

By Kevin Buckland

TOKYO, Oct 22 (Reuters) - Japan's Nikkei share average nudged higher in afternoon trading on Wednesday, recovering from earlier losses, as investors reacted positively to a report that the new prime minister is preparing a sizeable inflation-fighting stimulus package.

As of 0406 GMT, the Nikkei .N225 had risen 0.1% to 49,366.40, after falling 0.5% by the midday break due to profit-taking following a record high of 49,945.95 on Tuesday.

The broader Topix .TOPX extended gains to trade 0.7% higher at 3,271.29.

Fiscal and monetary policy dove Sanae Takaichi, who was confirmed as prime minister by parliament on Tuesday, is preparing an economic stimulus package expected to exceed last year's 13.9 trillion yen ($92.19 billion), government sources told Reuters on Wednesday.

The exact scale of the package is yet to be finalised, the sources added. It could be announced as early as next month.

($1 = 150.7800 yen)