Japan's Nikkei stock average rose 2.5 percent on Friday, snapping a three-day slide, as the yen retreated against the dollar and helped exporters extend gains made after improving U.S. job data.
The yen lost ground, helped in part by data confirming expectations that China's economy is on a brisk recovery path, which prompted some investors to liquidate long positions in the Japanese currency as business winds down for the year.
China's industrial growth in November accelerated to 19.2 percent from a year earlier, its highest since 2007, while investment expansion remained robust and imports surged 26.7 percent for their first rise in 13 months.
Some China-linked shares such as Hitachi Construction gained as a result.
"The slow but steady yen weakening and the Chinese data coming in as expected both worked to boost the market," said Nagayuki Yamagishi, a strategist at Mitsubishi UFJ Securities.
"With the futures and options settlement out of the way, Tokyo stocks could well make a try at a bit of a year-end rally, though after that stocks could well move in a pretty tight range," Yamagishi added.
In active trade, the benchmark Nikkei rose 245.05 points to 10,107.87 and advanced 0.9 percent on the week for its second straight week of gains. The broader Topix rose 1.7 percent to 888.57.
Nikkei futures and options contracts expiring in December settled at 9,982.59, the Osaka Securities Exchange said after the close of trade on Friday, confirming earlier estimates by stock traders.
The dollar rose 0.7 percent to 88.92 yen, helping exporters gain. Investors fret about a stronger yen as it eats into exporters' profits when they are repatriated.
"Investors are now trying to decide which direction to take next," said Masayoshi Okamoto, head of dealing at Jujiya Securities.
"We seem to have a tug-of-war between views of investors who expect the U.S. market to gain further towards the year-end and those who worry Japan won't be able to avoid the fallout, though indirectly, from problems in Europe such as Greece and Spain," Okamoto said.
Fitch Ratings has downgraded Greece's debt rating, while Moody's cut the ratings of six Dubai-linked issuers after concluding that no "meaningful" government support would be provided to top firms like DP World.
Standard & Poor's also warned on Wednesday that Spain risks a debt downgrade in two years if the government does not take tough action on its fiscal deficit.
U.S. NEWS A HELP
But news from the United States helped temper some of the concern.
The Labor Department said weekly jobless claims rose more than expected last week, but investors took comfort in the four-week average, a better view of underlying trends, which fell to the lowest since September last year.
A separate report showed the trade deficit shrank 7.6 percent as a weak dollar helped boost U.S. exports of goods and services to their highest in nearly a year.
Hitachi Construction rose 4.7 percent to 2,320 yen and Komatsu, the world's second-largest maker of earth-moving equipment, rose 3.4 percent to 1,867 yen.
Among exporters, TDK jumped 6.2 percent to 5,290 yen and Kyocera Corp rose 5.4 percent to 7,880 yen. Honda Motor gained 2.7 percent to 3,010 yen.
Sapporo Holdings rose 4.3 percent to 459 yen after the brewer said it would enter the Vietnamese market by taking a 65 percent stake in a beer joint venture with Vietnam National Tobacco Corp.
Shares of Jtekt Corp surged 6.7 percent to 1,099 yen after Credit Suisse lifted its rating on the autoparts maker to "outperform" from "underperform" and raised the target price to 1,400 yen from 950 yen.
The brokerage said the stock would still look undervalued even after factoring in the possibility of equity financing.
Trade was active on the Tokyo exchange's first section, with 2.7 billion shares changing hands, above last week's daily average of 2.4 billion.
Advancing stocks outnumbered declining ones by more than 3 to 1.
