Asian markets perk up on US lead, China rally cools

Asian stocks marched higher on Friday, following a positive lead from Wall Street, fueled by dovish signals from the U.S. Federal Reserve minutes.

"It's the perception that easier Fed policy means a weaker U.S. dollar and that helps emerging markets like China to grow," said Damien Boey, equity strategist, Credit Suisse told Reuters. "I'm not sure that we've seen the end of the problems for China yet but none the less, that's what investors seem to be pricing in."

In the U.S., the Dow Jones Industrial Average (Dow Jones Global Indexes: .DJI) closed above 17,000 for the first time since Aug. 19, gaining almost 1 percent and ending the session 138 points higher at 17050.75. The S&P 500 (^GSPC) closed up almost 1 percent at 2,013.43 and the Nasdaq (^IXIC) up 0.4 percent at 4,810.79.

The rises came as investors digested the Fed's September meeting minutes. "I think the combination of oil (gains) and the Fed minutes have lifted the indices here," said Peter Cardillo, chief market economist at Rockwell Global Capital, noting the minutes diminished the likelihood of a rate hike this year.

The minutes indicated that Fed policymakers were still watching domestic inflation and the impact of slower global growth. "I think you got a little more clarity on what the Fed was thinking. The decision to not raise rates was more collaborative than people thought. The call really wasn't that close," said Peter Coleman, head trader at Convergex.

Expectations that U.S. interest rates will remain near zero for the time being boosted the Nikkei 225 (Nihon Kenzai Shinbun: .N225), Japan's benchmark index, which closed up 1.6 percent at 18,438,67.

Bucking the uptrend, shares of Fast Retailing sank 10 percent after the Japanese apparel company missed its profit forecasts for the financial year due to losses at U.S. stores. It reported an operating profit of 164.5 billion yen ($1.4 billion) - well below a projected 200 billion yen.

Australian stocks logged their fifth straight day of gains, with the ASX 200 (^AXJO) ending 1.3 percent higher at 5,279.70 - a six-week high - underpinned by gains in resource-related stocks.

"The prospect of further U.S. dollar weakness was clearly a boon to the materials and energy sector again today. Shorts in these sectors also seem to be coming off at a rapid rate as well," Angus Nicholson, market analyst at IG. The materials sector has added 9.6 percent this week, while the energy sector is up 13.2 percent, according to IG.

China stock gains cool

China's stock rally cooled off, with the Shanghai Composite (Shanghai Stock Exchange: .SSEC) closing up 1.3 percent at 3,143.35. This followed a 3 percent gain on Thursday as the market resumed trading after a week-long holiday.

The country's third-quarter earnings season kicked into gear on Friday, with Shenzhen-listed Shandong Wohua Pharmaceutical reporting a 252 percent surge in profit, offsetting the gloom from Shanghai-listed Xinri Hengli Steel Wire Rope, which posted a loss.

Hong Kong's Hang Seng Index (Hong Kong Stock Exchange: .HSI) climbed 0.6 percent, gaining back some ground after being hit by profit taking a day earlier.

Shares of Chow Tai Fook rose as much as 4.5 percent after Hong Kong's biggest jewelry retailer said a mini-gold rush, spurred by lower prices, drove same-store sales growth up to 4 percent in the second quarter, Dow Jones reported.

Southeast Asian markets in favor

Markets in Southeast Asia powered ahead, benefiting from the broader risk-on investor sentiment.

Indonesia's Jakarta Composite (Jakarta Stock Exchange: .JKSE) rose 2.5 percent to its highest since mid-August. The stock index is set to post its best week since April 2009 after rising nearly 9 percent so far this week.

Meanwhile, Malaysia's KLCI (Kuala Lumpur Stock Exchange: .KLSE) and Thailand's SET Index (The Stock Exchange of Thailand: .SETI) tacked on 1.1 and 1.6 percent, respectively, joining the regional uptrend.

Markets in South Korea and Taiwan were closed for public holidays.

- Evelyn Cheng and Reuters contributed to this report.

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