Asian shares edged up on Friday as strong Chinese economic data supported regional recovery hopes, but Japanese exporters were hurt by a stronger yen as the dollar fell to its lowest in a year against a basket of currencies.
Robust retail, production and investment data for August indicated China's economy is accelerating and Beijing said it was confident of reaching its 8 percent GDP growth target this year, even though risks remain. Exports fell more than expected, indicating global demand remains weak.
The strong overall data from Asia's economic leader could further encourage a recent trend toward riskier assets and helped push the dollar lower.
The dollar index, which tracks its performance against a basket of six major currencies, fell 0.25 percent to 76.624, its lowest level in a year.
The MSCI index of Asia Pacific stocks traded outside Japan was up 0.7 percent by late morning. Shanghai's share market <.SSEC> rose 1 percent.
The data shows that the Chinese economy continues to strengthen overall, said Rob Subbaraman, chief Asia economist at Nomura. So it looks like GDP growth will pick up in Q3 from Q2.
Asian markets were also underpinned by gains on Wall Street but Japanese exporters including Toyota Motor <7203.T> fell, helping push the Nikkei index <.N225> down 0.5 percent, as the yen reached a seven-month high of 91.38 yen against the dollar.
Japanese government bonds gained on an unexpected downward revision to GDP data -- showing Japan's economy grew by 0.6 percent in the second quarter, down from a preliminary reading of 0.9 percent growth -- and after U.S. Treasuries surged following a robust 30-year bond auction.
Finance Minister Kaoru Yosano said the downward revision showed Japan's economy had not yet fully recovered although stock investors shrugged off the data.
The Dow Jones industrial average <.DJI> rose 0.8 percent on Thursday helped by upbeat corporate news and a sharper-than-expected fall in U.S. weekly jobless claims.
OIL PRICE AT $72
The Australian dollar cut losses against the dollar and the yen on release of the China data while the New Zealand dollar hit its highest level since August 2008, above $0.7045 as the China data added to hopes for regional economic recovery and demand for high-yield currencies.
Oil prices rose half a percent to above $72 a barrel. Oil's strength supported gold as a potential inflation hedge, keeping the yellow metal just below $1,000 an ounce.
South Korean treasury bond prices dived for a second day after the Bank of Korea signaled on Thursday that Korea could be one of the first countries in the world to raise interest rates. The yield on one-year treasury bonds rose 4 basis points to 3.56 percent, its highest level since the end of 2008.
The South Korean won was stable, though, as the market was wary of potential dollar-buying intervention by the foreign exchange authorities. It was trading at 1,221.1 to the dollar, compared with Thursday's domestic close at of 1,224.5.
(Editing by Kim Coghill)