Asian stocks rose on Friday, with Japan's Nikkei up almost 3 per cent, as chip makers extended a rally on expectations a slump in the sector may soon end, while the dollar steadied ahead of the G7 meeting later in the day.
Asian shares looked set to post a modest gain for the week, marking a third consecutive week of gains, though trading has been volatile amid revived concerns about a global financial crisis and a weakening US economy.
European shares were set to gain on Friday, breaking a three-day losing streak, as the euro and crude oil traded well below the records hit in recent sessions.
Oil prices continued to retreat from a record $112.21 (Dh411.81) hit on Wednesday, easing some of the concerns about inflation that had contributed to the volatility in stock markets.
The MSCI's measure of Asian stocks outside Japan rose 0.7 per cent as of 0610 GMT.
The index is up 0.5 per cent for the week, extending a recovery that saw it gain over 10 per cent during the previous two weeks.
Japan's Nikkei average gained 2.9 per cent. Fast Retailing Co surged 5.2 per cent after the retailer raised on Thursday its full-year operating profit forecast by 10 per cent on the back of a recovery at its Uniqlo casual clothing chain.
Technology shares, such as world's largest maker of microchip testers Advantest Corp, proved a bright spot as well, after chip makers on Wall Street gained overnight on an upgrade by Banc of America Securities of the US semiconductor sector.
Asian chip makers such as Hynix Semiconductor Inc had already rallied on Thursday following announcements including from Japan's Elpida Memory Inc that it would raise prices for some of its memory chips.
"The latest moves by chipmakers are raising hopes that perhaps the memory chip market downturn has hit bottom and will gradually get better from here," said Suh Do-won, an analyst at Hanwha Securities in Seoul.
"Over-supply concern still weighs heavily on memory chipmakers, but investors are hungry for the slightest good news and they are quickly responding to it," he added.
Shares in South Korea, Taiwan, Hong Kong, Singapore, and India gained by around 1 per cent each. The volatile Shanghai index was up 0.4 per cent.
The euro, though inching higher against the dollar, stayed well off the all-time peak hit on Thursday when European Central Bank President Jean-Claude Trichet expressed concerns about excessive volatility in foreign exchange markets.
The euro stood at $1.5780 up from around $1.5745 in late US trade on Thursday, but well off a record peak of $1.5915 hit in the previous session.
Despite the pull-back, traders expected the euro to rebound after Friday's meeting in Washington of Group of Seven finance ministers and central banks.
"There probably will not be any policy coordination on foreign exchange, and the dollar seems likely to stay weak for a while," said Tomoko Fujii, head of economics and strategy for Japan at Bank of America.
The dollar rose to around ¥102 edging back towards a one-month high of ¥102.95 hit last week.
Japanese government bonds fell, tracking a slide in Treasuries overnight and weighed on by the rise in share markets. The benchmark 10-year JGB yield rose slightly to 1.375 per cent.
Commodity prices eased, with US crude futures down 47 cents to $109.64 a barrel a day after top exporter Saudi Arabia insisted markets were amply supplied despite falling US inventories.
Prices of oil had shot up to a record on Wednesday after US government data showed a surprise drop in crude oil and fuel supplies.
Gold eased towards $921.90/922.70 an ounce on Friday, a day after jumping to its highest level since March 31 at $939.40. (Reuters)
Chip makers rally on Asian stocks