Nikkei hits one-week high on Wall St, dovish central banks

Japan's Nikkei share average rose to a one-week high on Friday morning, spurred by Wall Street's record-close overnight on strong US economic data and the commitment by major central banks to keep monetary stimulus in place.

A stronger dollar versus the yen also buoyed sentiment, lifting exporters like auto makers and electronics manufactures.

The Nikkei jumped 1.9% to 14,266.31, after rising as high as 14,284.00, the highest level since July 26 and surpassed its 25-day moving average of 14,277.48.

"There are two major factors. Signs of a recovery in the US economy and a weak yen driven by the strong dollar," said Hikaru Sato, senior technical analyst at Daiwa Securities.

The Dow and S&P 500 hit record closing highs on Thursday, with the S&P 500 topping 1,700.

Sato said that investors were also encouraged by a handful of positive earnings from the likes of Sony Corp and Sharp Corp, whose shares jumped 4% and 5%, respectively, after they posted strong profits for the first quarter ended June.

"Some investors are still cautious over companies' decisions to keep their full-year profit outlooks, but it also means that there is room for those companies to raise them later in the year, so earnings results overall are taken positively," Sato said.

The Topix rose 1.5% to 1,181.25.

The dollar rose 1.7% to 99.54 yen on Thursday after robust US jobless claims and manufacturing data. A weak yen lifts Japanese exporters' competitiveness abroad as well as profits when repatriated.

The focus in world markets now turns to the key US non-farm payrolls report due later in the global day.

A strong jobs report would increase the likelihood the Federal Reserve could begin tapering its stimulus in September, which could hurt the gains in equities and commodities, but it would support the dollar.

The European Central Bank and the Bank of England both ended policy meetings by leaving interest rates at record lows, a day after the Fed said the US economy still needed its support and avoided any mention of a change to its stimulus measures.

As of July 31, sales in the first quarter at the 156 ex-financial companies out of the 332 companies in the Russell/Nomura Large Cap Index were up 7.8% on year, while recurring profits were up 35.7%, Nomura Securities said.

The sectors that contributed most to the increase in the profit growth rate compared with the fourth quarter of the previous fiscal year ended March included software, telecommunications, and housing and real estate, Nomura said.

On Friday, investors were also looking out for corporate earnings from blue chip companies such as Toyota Motor Corp after the market closes.