Japan's Nikkei stock index rose strongly to end at a seven-month high on Friday, as weak U.S. economic data helped ease concerns about inflation in the world's largest economy.
The 225-issue Nikkei Stock Average gained 727.65 points, or 2.62 percent, from Wednesday to end at 28,546.98, a level unseen since Jan. 12. The broader Topix index finished 39.53 points, or 2.04 percent, higher at 1,973.18. Japanese financial markets were closed Thursday for a national holiday.
On the top-tier Prime Market, gainers were led by precision instrument, electric appliance, and oil and coal product issues.
In the currency market, the U.S. dollar was firm mostly in the lower 133 yen range following an overnight rise in long-term U.S. Treasury yields.
At 5 p.m., the dollar fetched 133.25-27 yen compared with 132.92-133.02 yen in New York at 5 p.m. Thursday.
The euro was quoted at $1.0296-0298 and 137.20-24 yen against $1.0314-0324 and 137.34-44 yen in New York late Thursday afternoon.
The yield on the bellwether 10-year Japanese government bond dipped 0.005 percentage point from Wednesday's close to 0.185 percent as investors bought the safe-haven debt after Wednesday's selloff.
Stocks were strong from the outset as weaker-than-expected U.S. consumer and producer price indexes for July eased inflation concerns, brokers said, adding investors also took a cue from strong U.S. shares on Wednesday just before the Japanese holiday.
"Investors turned positive after seeing a slowdown in inflation through the data," said Chihiro Ota, assistant general manager of investment research at SMBC Nikko Securities Inc.
The market was also buoyed by robust energy shares after the International Energy Agency raised its outlook for oil demand in 2022, citing soaring oil use for power generation purposes.
Refiners Cosmo Energy Holdings gained 145 yen, or 3.7 percent, to 4,045 yen, Eneos Holdings climbed 9.2 yen, or 1.8 percent, to 507.0 yen and Idemitsu Kosan went up 125 yen, or 3.5 percent, to 3,660 yen.
In other sectors, technology shares gained following their drop earlier in the week.
Tokyo Electron increased 2,010 yen, or 4.5 percent, to 46,420 yen and Advantest was up 320 yen, or 3.9 percent, at 8,440 yen.
But market analysts warned of further rate hikes by the U.S. Federal Reserve through next year to tame inflation.
"It is premature to think that the Nikkei will keep gaining and rise above the 29,000 or 30,000 mark next week," said Norihiro Fujito, senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities Co.
"Investors also need to pay attention to the exchange market where the dollar's one-sided rise against the yen seems to have reached its peak," Fujito added.
SoftBank Group surged 295 yen, or 5.6 percent, to 5,610 yen after the company said Wednesday it will cut its stake in China's Alibaba Group Holding Ltd. to increase its cash reserves.
Among Prime Market issues, advancing issues outnumbered decliners 1,607 to 192, while 39 ended unchanged.
Trading volume on the Prime Market rose to 1,457.93 million shares from Wednesday's 1,055.22 million.