Most Asian shares extended gains on Friday as key US earnings reports beat expectations, fuelling hopes that the global recession is receding, but deadly explosions at two Jakarta hotels weighed on Indonesia stocks and the rupiah.
Asian shares ex-Japan rose 0.4 per cent after recording their highest close in a month on Thursday.
Asia ex-Japan equity funds were the only ones of the four major emerging markets fund groups to see inflows during the second week of July, according to global fund tracker EPFR, while Japan equity funds recorded inflows for the third straight week.
Japan's benchmark Nikkei clawed up 0.4 per cent to 9383.50. Gains have been limited by political uncertainty since Monday, when embattled Prime Minister Taro Aso said he aimed to call an election for August 30, despite grim prospects for his long-ruling conservative party.
Nissan Motor climbed 2.2 per cent after the Nikkei business daily said Japan's third-largest automaker aims to develop its own hybrid technology for small and mid-size cars and will launch a vehicle using that system in Japan in 2011.
The yen gained broadly and oil and gold edged down.
The blasts at the Ritz-Carlton Hotel and the Marriott Hotel in central Jakarta killed six people, sending Jakarta stocks down 2 per cent and lopping 0.7 per cent off the rupiah, which has been Asia's best performing currency so far this year.
Strong earnings for major US companies continued to cheer global markets as the quarterly reporting season moved into higher gear, pushing US share indexes up about 1 percent overnight.
JPMorgan Chase saw quarterly profit soar 36 per cent and US bellwether IBM strongly beat forecasts in earnings announced after the bell.
Share markets have been keenly watched as a barometer of investor confidence, and market players were keeping a wary eye on earnings due out later on Friday, including Citigroup and Bank of America.
"Earnings from US banks have been upbeat, but there are concerns that the positive results could be limited to the second quarter," said Takahiko Murai, general manager of equities at Nozomi Securities.
"Some institutions appear to hold significant bad loans and third quarter results may not be as encouraging," he added.
Amid the good news, JPMorgan reported a surge in consumer credit losses, showing the economic recovery still has a long way to go, and Citigroup and Bank of America were expected to post relatively weaker performances, one trader said.