TOKYO - The yen eased Thursday as Japan nominated a new central bank chief known to favour aggressive easing and after the US Federal Reserve's head confirmed it would continue with its own loose monetary policy.

The market's immediate reaction was muted after the widely expected announcement that Asian Development Bank chief Haruhiko Kuroda had been put forward to run the Bank of Japan, guiding policy for the world's third-largest economy.

His appointment, and that of two deputies, must still be approved by parliament.

The yen in fact clawed back some losses after the announcement, but was still weaker than in New York late Wednesday, with the dollar fetching 92.30 yen in Tokyo from 92.16 yen, while the euro bought 121.35 yen from 121.07 yen.

Against the greenback, the euro was quoted at $1.3141, up slightly from $1.3136 following a better-than-expected bond auction in Italy.

"Improved risk appetite is leading to Japanese yen selling," Junichi Ishikawa, market analyst at IG Securities, told Dow Jones Newswires.

Markets largely brushed off government data Thursday morning that showed Japan's factory output for January rose a lower-than-expected 1.0 percent on-month.

Kuroda's nomination was likely to ramp up speculation that the BoJ will unleash more aggressive easing measures to stoke the economy and tackle Japan's long-running deflation, a key promise of Prime Minister Shinzo Abe.

Abe's administration has leaned on the central bank to further loosen its monetary policy, fuelling criticism that Tokyo is intentionally pushing down the yen's value and risking a global currency war as rival nations race to gain a trade advantage.

Upbeat US economic data supported the dollar, after Fed chief Ben Bernanke said the central bank's $85 billion a month scheme of monetary easing would remain in place until the world's biggest economy cements a recovery.

His comments soothed recent concerns it would be wound up sooner than expected after the release of minutes of the Fed's last policy board meeting showed some members looking to scale back.

In Italy, inconclusive national elections in the debt-hit nation had stoked fresh fears about eurozone stability, but those were eased slightly after an auction of 6.5 billion euros in Italian bonds showed strong demand.

The dollar was mixed against other Asia-Pacific currencies, slipping to Sg$1.2361 from Sg$1.2381 a day earlier, to 1,081.60 South Korean won from 1,084.20 won, and to 9,669 Indonesian rupiah from 9,685 rupiah.

It also eased to 53.68 Indian rupees from 53.94 rupees, to Tw$29.67 from Tw$29.69 and to 40.66 Philippine pesos from 40.75 pesos, while it was flat at 29.83 Thai baht.

The Australian dollar rose to $1.0274 from $1.0219 and the Chinese yuan firmed to 14.79 yen from 14.73 yen.