Asian shares lifted as Fed reassures on stimulus

Asian markets mostly rose Friday after a US Federal Reserve official moved to soothe fears the bank would wind up its stimulus programme too soon.

Japan's Nikkei index led the gains as the dollar edged back towards the 100 yen mark, helped by a better-than-expected batch of economic data.

Hong Kong and Shanghai were also supported by comments from the head of the central People's Bank of China that it would "adjust" liquidity to ensure stability as financial markets suffer a credit squeeze.

Tokyo climbed 3.51 percent, or 463.77 points, to 13,677.32 and in the afternoon Hong Kong added 1.21 percent, while Shanghai finished a tough week on a high, putting on 1.50 percent, or 29.19 points, to 1,979.21.

Seoul finished 1.56 percent stronger, adding 28.62 points to 1,863.32, but Sydney was hit by late profit-taking to close 0.18 percent, or 8.7 points, lower at 4,802.6.

The upbeat outlook comes at the end of a tough month for global markets after Fed chairman Ben Bernanke indicated it could start to reel in this year its $85-a-month bond-buying scheme, which keeps interest rates down.

Asia followed a rally on Wall Street, where investors welcomed comments from the Fed officials, including the bank's New York president William Dudley, who said "a rise in short-term rates is very likely to be a long way off".

Dudley said the bank's policy deeply depends "on the progress we make towards our objectives" of pushing unemployment down to 6.5 percent and getting the economy back up to strength.

"This means that the policy -- including the pace of asset purchases -- depends on the outlook rather than the calendar."

"If labour market conditions and the economy's growth momentum were to be less favourable than in the (policy committee's) outlook -- and this is what has happened in recent years -- I would expect that the asset purchases would continue at a higher pace for longer."

Separately, Atlanta Fed president Dennis Lockhart added: "The chairman said we'll use the patch," referring to the aid smokers use to give up gradually. "And some in the markets reacted as if he said 'cold turkey'."

In New York trade the Dow rose 0.77 percent, the S&P 500 added 0.62 percent and the Nasdaq was 0.76 percent higher.

In Tokyo, the government released figures showing industrial production jumped 2.0 percent in May from a month earlier, much better than the 0.2 percent that was expected.

"Broadly speaking I believe this indicates a gradual recovery," said Yasuo Yamamoto, senior economist at the Mizuho Research Institute.

The news helped push the yen lower against the dollar, after losing ground in US trade on the back of the Fed comments.

The dollar was at 98.84 yen in Tokyo on Friday, up from 98.43 yen late in New York, and well up from the high-97 yen levels in Asia on Thursday.

The euro also rose to 128.95 yen from 128.40 yen, while it bought $1.3046 from $1.3035.

Concerns about the Chinese economy were eased slightly by central bank chief Zhou Xiaochuan, who told a forum in Shanghai: "The PBoC will use all sorts of instruments and measures to adjust the overall liquidity level, so as to ensure the overall stability of the market."

The announcement is the latest from the bank aimed at soothing confidence after global markets were rattled this week by a credit crunch in China's financial system that has reportedly seeped into the wider economy.

However, despite the uptick in Shanghai shares on Friday the market lost more than 13 percent throughout June. Eyes will be on the release of manufacturing activity data due for release next week.

Gold, which has suffered a sell-off in recent days, fetched $1,201.32 per ounce by 0720 GMT, compared with $1,229.60 late Thursday.

Oil prices rebounded after early losses. New York's main contract, West Texas Intermediate (WTI) light sweet crude for delivery in August, rose 20 cents to $97.25 a barrel and Brent North Sea crude for August gained 21 cents to $103.03.

In other markets:

-- Taipei rose 2.26 percent, or 178.31 points, to 8,062.21.

Taiwan Semiconductor Manufacturing Company rose 6.22 percent to Tw$111.0 while Hon Hai was 1.37 percent higher at Tw$74.0.

-- Wellington rose 0.53 percent, or 23.21 points, to 4,440.17.

Chorus rose 4.8 percent to NZ$2.39, Fisher & Paykel Healthcare was 2.7 percent higher at NZ$3.45 and clothing firm Pumpkin Patch fell 9.3 percent to NZ$0.78.