Japanese stocks rose sharply Friday fueled by Wall Street's climb overnight and a generally weaker yen.
The benchmark Nikkei 225 index added 306.23 points, or 1.94 percent, to 16,127.42 points on the Tokyo Stock Exchange.
Traders said investors will likely base their positions after Japan's three-day weekend on the outcome of the Federal Open Market Committee's meeting on U.S. interest rates Sept. 18. Trade may also depend on U.S. bank earnings scheduled to come out next week, traders added.
The Dow rose 133.23, or 1.00 percent, to 13,424.88 Thursday on strong gains by blue chip companies and as mortgage lender Countrywide Financial Corp. signaled a possible thawing in credit markets with the announcement it had lined up additional financing. The lender was at the center of the storm over U.S. subprime loan problems and any positive news for the company is taken as a good sign for the U.S. economy.
"The priority for investors is to see the status of the U.S. economy," said Hiroaki Kuramochi, head of the cash equities department at Bear Stearns in Tokyo, adding that the Nikkei will probably be tethered between 16000-16200 early next week if the dollar keeps trading above the 115 yen level.
Friday, the U.S. dollar was trading at 114.98 yen at 2:50 p.m. (0550 GMT) Friday, down from 115.29 yen late Thursday in New York. But the yen has been trending weaker since Monday, when the dollar was trading at 113.16 yen.
The weaker yen this week helped Toyota gain 2.4 percent Friday to 6,530 yen. Sony added 2.1 percent to 5,420 yen. A weaker yen inflates their overseas earnings and makes their exports more competitive.
Bank shares staged an afternoon rally after the Bank of Japan said it has joined the Islamic Financial Services Board as an observer member. Sumitomo Mitsui gained 3.9 percent to 821,000 yen, and Mitsubishi UFJ rose 4 percent to 1.04 million yen.
Oil companies extended gains Friday as crude oil futures edged up in New York, settling above $80 a barrel for the first time Thursday as a power outage in Texas shut down a major refining hub and boosted gasoline futures prices. Nippon Oil rose 1.3 percent to 1,026 yen.
The broader Topix index, which includes all shares on the exchange's first section, rose 21.84 points, or 1.43 percent, to 1,544.71 points.
In other currencies, the euro fell to US$1.3874 from US$1.3927 late Thursday in New York.
Japan's markets will be closed Monday for Respect for the Aged Day. Trading will resume Tuesday.
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