Asian markets edged up Friday, led by exporters in Japan, as fears of a deep U.S. recession receded, but gains were capped by worries that inflation will cut into growth and lead to higher borrowing costs.
Despite a $4 drop in oil prices overnight, crude prices have still risen by a third since 2008 began, sparking concerns that energy costs will push down consumer spending and business investment and cause inflation to spiral higher.
The U.S. dollar edged up towards a three-month high against the yen after U.S. economic growth figures were revised upwards Thursday. The weaker yen helped to boost export stocks with good brand recognition in overseas markets like Canon, Sony and Toyota Motor, pushing Japanese stocks higher.
Tokyo's Nikkei 225 Average rose 1.5 percent to its highest close in over four months. In addition to exporters, financials such as Japan's biggest lender, Mitsubishi UFJ Financial Group, also rose sharply in the final trading of the month, during which the Nikkei gained 3.5 percent.