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Asian Markets Rally, Japan and Australia Gain 2%

Asian markets were sharply higher Friday after better-than-expected economic data, a rebound in the U.S. dollar and falling oil prices and triggered a rally on Wall Street. Both Japan and Australia closed 2 percent higher.

Data showed U.S. personal spending in March was higher than expected, while manufacturing activity did not contract as much as some analysts had feared. Investors are now focusing on the non-farm payrolls report due out later on Friday.

Oil prices dropped below the $112 level and have fallen from record highs near $120 hit last month as demand in top consumer the United States sags under the weight of surging fuel prices and wider economic problems.

The dollar's rise against the yen is boosted shares in exporters such as Honda Motors. However, resource firms such as China's CNOOC and Japan's Inpex Holdings fell as the stronger dollar hit commodities such as oil, gold and copper.

A man uses his mobile phone in front of electronic stock boards at the Australian Securities Exchange (ASX Ltd.) headquarters in Sydney, Australia.
Ian Waldie | Bloomberg | Getty Images
A man uses his mobile phone in front of electronic stock boards at the Australian Securities Exchange (ASX Ltd.) headquarters in Sydney, Australia.

Tokyo's Nikkei 225 Average gained 2 percent to its highest close in nearly four months, buoyed by exporters such as Advantest on a softer yen and a rally on Wall Street amid growing optimism about the U.S. economy.

South Korea's KOSPI closed 1.25 percent higher led by technology titles such as Samsung Electronics and Hynix Semiconductor, tracking an overnight rally in their U.S. peers and lifted by an improving memory chip market outlook.

Australian shares finished up 2 percent to a nine-week high, led up by banking shares as investor confidence returned, though a drop in metals prices dented resource firms such as Newcrest Mining. Financial firms tracked their U.S. peers higher as sentiment towards the sector continued to improve after a tumultuous first quarter. National Australia Bank, Commonwealth Bank of Australia and Westpac Banking all rose.

Hong Kong stocks closed 1.9 percent higher, tracking strong regional and U.S. shares, as lower oil prices boosted energy firms such as PetroChina and property plays gained after the city cut interest rates.

Singapore's Straits Times Index ended 2.7 percent higher with financials such as DBS Group and United Overseas Bank leading the advance. Cosco rose as much as 6 percent after the firm said its first-quarter net profit doubled and that it was confident about prospects in 2008.

Chinese markets are closed for the Labour Day holidays. They will reopen Monday.