Dollar pares losses

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TOKYO: The yen firmed against the dollar on Wednesday after data showed Japan's economy unexpectedly expanded at the fastest pace in a year in the first quarter, but later gave up most of its gains on views that more stimulus is needed to keep growth on track.

Japan's economy expanded by an annualised 1.7 percent in January-March, easily beating the median market forecast for a scant 0.2 percent increase and rebounding from a 1.7 percent contraction in the previous quarter, the Cabinet Office data showed.

While some investors pared bets on further stimulus after the better-than-expected headline figure, many noticed the details of the GDP report were not consistently bright.

"The yen strengthened a bit because growth was stronger than many had expected," said Ayako Sera, market strategist at Sumitomo Trust and Banking. "But looking at the details, there were still some concerning areas, including capital spending." Chief Cabinet Secretary Yoshihide Suga told a news conference after the data that Japan is making steady progress towards beating deflation but private consumption continues to be weak with the effect of a sales tax hike in 2014 remaining.