Asian shares rose on Friday, with South Korean stocks hitting a 6-month high after the country averted recession in the first quarter, as a Wall Street rally boosted risk demand around the region and dented the yen.
Many financial centers in the region were closed for a long weekend, making investors nervous that gains made now may not be sustained next week when many major U.S. companies report quarterly earnings.
The Nikkei hit a three-month closing high for the second day in a row, though off the day's peak reached above the psychologically key 9,000 level, as banks tumbled after Sumitomo Mitsui Financial Group <8316.T> warned of a net loss for the financial year just ended, reviving fears for other megabanks.
Nikkei <.N225> edged up 0.5 percent to 8,964.11.
U.S. shares rebounded after Wells Fargo
In Taiwan, this dovetailed with Cathay Financial <2882.TW> rallying after it reversed a year-ago loss to report market-beating first quarter profits, helping shares hit a 6-month high.
Taiwan's main TAIEX share index <.TWII> gained 2 percent to 5,781.96, while the Korea Composite Stock Price Index <.KS11> (KOSPI) rose 1.5 percent to 1,336.04.
Seoul shares gained additional upward impetus with a positive growth estimate for the first quarter from South Korea's central bank.
The market was helped by Wells Fargo's stronger than expected first quarter results estimate, fueling hopes of stabilization in U.S. financial markets, said Won Jong-hyuck, a market analyst at SK Securities in Seoul.
Global investors have been keenly awaiting U.S. financial results, which move into high gear next week when Goldman Sachs, JP Morgan Chase and Citigroup are all set to report.
If U.S. banks show some signs of improvements and stabilization, the index could make a more meaningful rebound. Better numbers from banks will point to stronger economies in the second half, said Lee Sun-yeob, a market analyst at Goodmorning Shinhan Securities.
But there was little joy for financials in Japan a day after its third-largest bank, Sumitomo Mitsui Financial Group <8316.T>, said it faces a net loss of $3.9 billion for the financial year just ended and would raise as much as $8 billion through the sale of shares.
This revived worries for its larger rivals, seen as even more sensitive to declines in Japanese share prices, with No. 2 bank Mizuho Financial Group <8411.T> tumbling 9.6 percent.
The MSCI index of Asia-Pacific stocks outside Japan <.MIAPJ0000PUS> rose 0.5 percent, back near a six-month peak hit on Monday.
The euro fell to its lowest in almost a month against the dollar, dented by holiday trade and a view the European Central Bank may be edging closer to unconventional easing.
ECB President Jean-Claude Trichet said on Thursday the ECB still had some leeway to cut its main interest rate from its record low of 1.25 percent.
He repeated it would lay out plans for possible unconventional monetary policy measures at its next meeting in May. He did not give details, but another ECB official said buying debt could ease credit availability.
The dollar initially rose against the yen but fell back in later trade, down 0.1 percent at 100.35 yen by 2 a.m EDT.
Japanese government bonds edged up as investor demand for debt revived a little with the market beginning to process news of an upcoming increase in supply.
The benchmark 10-year JGB yield fell 2.5 basis points to 1.450 percent.
(Editing by Kazunori Takada)
(Additional reporting by Jungyoun Park in Seoul)