Japanese stocks rose this week, lifting the Nikkei 225 Stock Average and the Topix index to their biggest weekly gains in four, as a government report showed the economy grew at its fastest pace in 13 years in the past quarter.
Nissan Motor Co led a surge in automakers as the yen had its largest weekly decline against the dollar in five years after the Bank of Japan sold the currency. Media reports later said Japan raised its terror alert to the highest since March, prompting further yen falls. A weaker yen boosts the value of overseas sales and profit.
"We've got the macroeconomic environment in check for Japan," said Hiroaki Muto, who oversees US$60 billion in Japanese equities at Nissay Asset Management Corp in Tokyo. "The BOJ's intervention has been helping, sending the yen weaker and that's prompted some money to shift to automakers."
The Nikkei gained 1.5 percent to 10,720.69, while the Topix rose 1.7 percent to 1058.76. Both benchmarks had their biggest weekly advances since the five days ended Jan. 23.
Elsewhere in the region, the Morgan Stanley Capital International Asia-Pacific Index excluding Japan shed 0.5 percent.
Hong Kong's Legend Group Ltd, Asia's biggest computer maker outside Japan, was the second-worst performer after reporting earnings that missed some analysts' estimates.
South Korea's Kospi index lost 0.5 percent, led by oil refiners such as SK Corp and S-Oil Corp, after crude prices reached one-month highs.
Thailand's SET Index slid 3.5 percent, the worst performer in the region. PTT Pcl led declines among the largest companies by market value after a scientist said two cats died of bird flu, raising concern that other animals may be infected with the disease that has killed seven people in Thailand.
In the US, the NASDAQ Composite Index shed 0.8 percent for the week and the Standard & Poor's 500 Index slipped 0.2 percent.
The Dow Jones Industrial Average dropped 0.1 percent. Stocks on Friday fell for a third day as comments from Hewlett-Packard Co about computer-industry growth suggested share prices don't justify their earnings outlook.
The Topix Transportation Equipment Index, which includes automakers, jumped 4.7 percent this week, making it the best performer among the 33 sub-indexes in the Topix.
Nissan, 44 percent owned by Renault SA, rallied 9.2 percent to 1,166 yen, its biggest weekly advance since June 20.
The automaker's annual operating profit increases by about ?10 billion (US$93 million) for every ?1 the Japanese currency weakens against the dollar, Nissan chief executive officer Carlos Ghosn has said.
Honda Motor Co, which generates almost 90 percent of its operating profit in North America, advanced 4 percent, while Toyota Motor Corp, which derives more than four-fifths of its operating profit from North America, climbed 3.9 percent.
Japan's economy grew at a 7 percent annual pace in final three months of 2003. 31, the government said on Wednesday. The median of 34 forecasts in a Bloomberg News survey of economists had tipped 4.7 percent growth. By comparison, US GDP expanded at a 4 percent pace last quarter.
Japan's growth in the quarter was its fastest since the country's bubble economy collapsed in 1990, slashing property values and leading to three recessions.
The Japanese currency weakened 3.4 percent against the US counterpart in the week, its biggest weekly loss since the five days ended Feb. 19, 1999. The central bank sold yen on at least one day this week, according to traders who deal with the Bank of Japan.