Nikkei leads gains on global growth optimism but China bucks trend
Asian stocks closed mostly higher on Friday, tracking gains in global equity markets as upbeat manufacturing data offset fears about a reduction in U.S. monetary stimulus but Chinese shares bucked the trend ahead of earnings results next week.
Japan's Nikkei increased over 2 percent, South Korea's Kospi rebounded from a one-month low and Australia's S&P ASX 200 hit a one-week high. However, the Shanghai Composite reversed earlier gains to hit a two-week low.
Thursday saw the U.S. manufacturing purchasing managers index (PMI) post its best showing since March while euro zone PMI data also beat expectations. Both followed China's HSBC PMI figure, which hit a four-month high for the month of August.
A positive lead from Wall Street also boosted sentiment in Asia. U.S. stocks closed higher on Thursday after the Nasdaq reopened following a trading halt that lasted over three hours.
"Don't get bullish on Asian markets – they probably won't perform for the next 12-18 months. People talk about Asian consumption, but we have had that that consumption story for the last 5 years, and now its peaking out. That doesn't mean there won't be rallies here and there – there will be, but those are tricky to play. Asia has to go through a quiet period of low volumes and a lack of interest to build a base again," said Mark Matthews, head of research Asia at Julius Baer in a note.
Nikkei up 2%
Japanese shares pared gains after briefly touching a one-week high at the 13,774 mark but the index was still Asia's outperformer, thanks to a weaker currency. The dollar rose to a three-week high at 98.9 yen, giving manufacturers a greater price advantage in overseas markets.
Automakers performed well with Mitsubishi Motors up 2.6 percent on news that it plans to build its second manufacturing facility in the Philippines by around 2015. Mazda Motor rose 3.6 percent while Nissan rose 3.4 percent.
Amada rallied 5 percent after the Nikkei newspaper reported that the metal-processing machines maker could post better-than-expected first-half earnings.
But shares of Tokyo Electric Power extended losses to close down 4.3 percent due to ongoing concerns about a contaminated water leak.
Australia up 1%
Australia's benchmark index rose above 5,120 points to its highest level in a week as investors cheered a turnaround in Chinese manufacturing activity.
In earnings news, infrastructure firm Lend Lease jumped 1 percent after reporting a 9 percent rise in operating profit while casino operator Crown climbed nearly 6 percent after its full-year net profit increased 14 percent.
"49 percent of companies [so far] have surprised on the earnings line (with 2.7 percent coming in line with expectations). This suggests one thing: the biggest theme to FY13 reporting season is consolidation. The fact that 52 percent (including the in line results) of companies improved the earnings line illustrates that consolidation is well underway," said Evan Lucas, market strategist at IG in a note.
Shanghai down 0.5%
Investors sold off Chinese shares in afternoon trade on caution ahead of a raft of corporate earnings results next week, leading the benchmark index to retreat further from a three-day high. The sell-off came on the heels of positive economic data, which showed foreign direct investment for the first seven months of 2013 up an annual 7 percent.
Brokerages were in focus after the China Securities Regulatory Commission (CSRC) decided to widen its investigation of stock trading systems to all brokerages following its probe of Everbright Securities, the firm behind last Friday's trading glitch.
Hong Yuan Securities and Haitong Securities fell 2 percent each while Everbright shares fell 1.4 percent after trading was suspended on Thursday afternoon.
Automakers propped up the index on upbeat earnings results. Geely Autombiles rose over 3 percent after its first-half profit increased 37 percent while the mainland's top SUV manufacturer Great Wall rose 1 percent after a 74 percent surge in first-half net profit.
Kospi rises 1.1%
South Korea's benchmark index rose above 1,860 points, moving off the previous day's one-month low thanks to strong gains in blue-chip stocks.
— By CNBC.com's Nyshka Chandran. Follow her on Twitter @NyshkaCNBC