Yen heads toward seven-year low The yen neared its weakest level in seven years on Thursday and Tokyo's stock indices once more outperformed their Asian peers with the prospect of a snap election continuing to hold sway over the country's markets. Speculation that Shinzo Abe, Japan's prime minister, could seek to confirm his mandate for extended stimulus and delay a second scheduled increase in consumption tax set for next October continued to dominate sentiment. Three of the biggest domestic newspapers have reported this week that the prime minister was considering a lower-house election on December 14 or 21, citing senior members of the government and the ruling Liberal Democratic Party. On Wednesday, the Reuters news agency quoted a senior official, Tadamori Oshima, as saying: "It looks like Shinzo Abe has finally made up his mind and it's fair to consider that he decided to go to the people." The first increase in consumption taxes took place in April, and was thought to reduce Japan's output in the second quarter, damaging the government reforms designed to banish deflation. The yen hit a session low of Y115.87 against the dollar, and by late afternoon in London was down 0.1 per cent with Y115.61 required to buy a single dollar. On Tuesday, the yen hit Y116.09 - its lowest since 2007. The benefits of a weaker yen for exporters were highlighted in a report from rating agency Fitch, which pointed out that the sustained slide in the currency has enabled Japan's big three carmakers "to maintain or raise group profit guidance despite the weaker-than-expected outlook in several key emerging markets." The report said Toyota, the sector's biggest exporter, had the most to gain: "It is unlikely the original operating profit guidance set by the automakers would have been maintained (or increased in the case of Toyota) if it were not for the yen's depreciation. Demand growth across many key emerging markets and in Japan has been - and will continue to be - slow or negative in the short term. Toyota's shares rose 1.3 per cent to Y6,939 - up more than 21 per cent in the past four weeks. The Nikkei 225 was once again the best performing stock index in Asia, up 1.1 per cent at 17,392.79, and is now nearly 20 per cent higher in the last four weeks. The election speculation has also sparked volatility in Japanese government bonds (JGBs). On Tuesday and Wednesday the yield on the 10-year JGB jumped a total of 8 basis points, the most in more than a year. The yield recovered 5.6 bps on Thursday to 0.51 per cent.