Japan's Nikkei ends 0.40% higher

Japanese markets eked out modest gains and the yen strengthened against the dollar after Bank of Japan Governor Kazuo Ueda reaffirmed his resolve to raise interest rates if economic and price developments move as forecast.

Data out early in the day showed Japan's core inflation accelerated for a third straight month in July due to higher electricity costs.

The Nikkei average rose 0.40 percent to 38,364.27 while the broader Topix index settled half a percent higher at 2,684.72. Pharma stocks led the surge, with Sumitomo Pharma and Chugai Pharma rallying 3.5 percent and 1.5 percent, respectively.

Japan's core inflation edged up in July as expected on higher energy prices but underlying inflation fell below the 2 percent target for the first time since 2022, adding uncertainty over another interest rate hike from the Bank of Japan.

Core inflation that excludes prices of fresh food rose marginally to 2.7 percent in July from 2.6 percent in June, the Ministry of Internal Affairs and Communications said Friday.

Headline inflation held steady at 2.8 percent in July. On a monthly basis, consumer prices gained 0.2 percent after rising 0.3 percent in June.

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