TOKYO (Reuters) - Japanese stocks crawled to a fresh 15-year peak on Friday after the US dollar surged against the yen as upbeat U.S. data flipped expectations back in favour of an early interest rate hike by the Federal Reserve.
The rest of Asian equity markets lagged Japan after a sharp pullback in oil prices dulled risk appetite and sent Wall Street lower overnight.
MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.3 per cent, with South Korean and Australian shares posting light losses.
Tokyo's Nikkei rose 0.3 per cent after touching a high not seen since June 2000, helped by a weaker yen which is seen sharpening Japanese exporters' competitiveness and boosting their earnings.
The dollar was steady at 119.36 yen after rising about 0.5 percent overnight from a low of 118.68. The dollar index hovered near a one-month high of 95.357.
Dollar bulls, disappointed earlier this week by perceived dovish signals from Fed Chair Janet Yellen, took heart again after data released on Thursday showed U.S. core inflation rose more than expected.
Robust U.S. durable goods orders also helped, with both sets of data driving Treasury yields higher and supporting the dollar.
Investors are now waiting on revised fourth quarter U.S. gross domestic product data due later on Friday for another health check of the world's largest economy.
Economists polled by Reuters expected U.S. growth in the fourth quarter to be revised down to 2.1 per cent from a preliminary 2.6 per cent.
"As growth in the upper range of 2 percent is the Fed's prerequisite for an early and sustained rate hike, a figure just around or below 2 percent is likely to hurt expectations for a June hike and weigh on the dollar," said Masafumi Yamamoto, market strategist at Praevidential Strategy in Tokyo.
The euro was little changed at US$1.1205, not far from a one-month trough of US$1.1184 plumbed overnight.
U.S. crude oil posted a modest rebound and was up 1.5 per cent at US$48.87 a barrel after plunging 5.5 percent overnight as rising U.S. inventories countered expectations for recovering demand.