Asian Markets Rally, Japan Surges 2.4%

Asia stocks rallied Friday, led by industrial companies and exporters, after a big upward revision to second quarter U.S. economic growth boosted the outlook for demand. Japan closed 2.4 percent higher, the market's bigger one-day percentage gain in three weeks.

The U.S. dollar slipped as oil prices climbed $1 as Tropical Storm Gustav with hurricane-force winds headed to the Gulf of Mexico, home to a quarter of U.S. crude production. Crude tumbled more than $2 overnight after the U.S. government promised to tap emergency stockpiles if needed.

Data from the U.S. overnight underscored the extent to which the U.S. economy -- the origin of the credit crisis plaguing the global financial system -- has outperformed Europe and Japan since March. This supported the U.S. dollar in August, setting it on track for its largest monthly rise against the euro since January 1997.

Japan's Nikkei 225 Average surged 2.4 percent after Canon and other exporters rose after surprisingly strong U.S. GDP data temporarily eased fears about its economic health. Mitsubishi UFJ Financial Group and other banks gained as well after their U.S. peers rose on the brighter economic outlook and a management shake-up at top mortgage financial company Fannie Mae .

Seoul shares ended flat, with falls in Doosan Group-associated shares after a unit of the group announced financing plans dragging on the index, while financials and steelmakers rose after extended losses.

Australian shares rose 1.4 percent, led higher by financial stocks such as Macquarie Group, as concerns about the global economy eased following strong U.S. growth figures.

Hong Kong shares rose 1.4 percent, staging a strong rebound from the previous session's sell-off, after data showed the U.S. economy grew at a surprisingly strong clip in the second quarter. But CLP Holdings fell 3.6 percent after Hong Kong signed a memorandum of understanding with China on natural gas supply, threatening the need for an LNG terminal project that the city's largest power utility was bidding to build.

Singapore's Straits Times Index gained 1.8 percent. Shares in Olam International leapt as much as 6.6 percent in heavy turnover after the company reported a strong set of earnings on the back of demand for grains and food ingredients.

China's Shanghai Composite Index rose over 2 percent, led by property shares as they recovered from recent weakness and by Baoshan Iron and Steel, which beat forecasts with its first-half earnings. Financial shares also stayed firm with Bank of China advancing after posting a forecast-beating 42.8 percent rise in first-half profit, as wider interest margins helped to offset its exposure to U.S. subprime-related holdings.