Asian shares hit a new 14-month high today on investor optimism over the global economy, while the dollar rose on short-covering following its slide earlier in the week.
European shares were set to fall back on Friday after a 1.3 per cent rise in the previous session, with miners likely to give back some gains after gold slipped from a record high.
Japan's benchmark Nikkei average rose 1.9 per cent, with resource-related stocks climbing after gold hit a record high the previous day.
Shares of Japanese exporters such as Sony and Honda rose as the yen dipped against the dollar.
But market players remain worried that the yen could rise further after climbing to an 8½ month high against the dollar this week, and hurt Japanese exporters' earnings.
The MSCI index of Asia-Pacific stocks outside Japan extended the week's robust gains to hit a 14-month high of 402.16 points. After trimming some gains it was 0.4 per cent higher at 401.61.
The index has risen about 4.7 per cent this week, on track for its best weekly gain in almost three months.
It has gained 62 per cent so far this year, on track for its biggest annual jump since an 80 per cent rise in 1993.
But it is still down 32 per cent from a peak hit in November 2007 before a global recession started to set in.
South Korean shares climbed 1.9 per cent after the Bank of Korea held interest rates steady and comments by the central bank's governor prompted investors to scale back their bets for a near-term rate rise.
South Korea and some of its neighbours have recovered more quickly from the financial crisis than expected, in contrast to the still-weak performance of big Western economies.
China's Shanghai Composite Index rose 4 per cent as the market played catch-up with a global rally over an eight day national holiday in China that lasted until yesterday.
The Bank of Korea's rate decision had been in the spotlight after the Reserve Bank of Australia earlier this week became the first of the Group of 20 central banks to raise interest rates since the onset of the financial crisis.
The RBA's rate hike underscored for many investors that the global economy is on the mend, and has spurred gains in energy and metal prices on expectations of a pick-up in demand.
Reuters