HSNGY Hang Seng Bank Ltd (PK)

A weaker yen sent Japan's Nikkei to a 10-month high on Friday, helping drive gains across key Asian markets as robust U.S. economic data buoyed expectations of an interest-rate hike next month.

The Nikkei Stock Average was up 0.8%, having traded at its highest level since Jan. 7 earlier in the session at 18043.72 points. Australia's S&P/ASX 200 was 0.3% higher, the Hang Seng Index in Hong Kong added 0.3%, and Singapore's FTSE Straits Times Index added 0.6%.

Overnight, Federal Reserve Chairwoman Janet Yellen said an interest-rate increase could happen "relatively soon." Her comments come amid upbeat data, with the number of Americans applying for first-time unemployment benefits falling to its lowest level since November 1973.

Meanwhile, U.S. consumer prices increased in October from a year earlier at the fastest rate in two years. According to CME Group's FedWatch tool, the likelihood of an interest-rate rise at the Fed's meeting in December is now higher than 90%.

"It's all [about] Yellen's speech," said Tareck Horchani, deputy head of Asian-Pacific sales trading at Saxo Markets. "All of this pushed the dollar higher…and dollar-yen exploded."

The dollar gained further strength in early Asia trade Friday, pushing it beyond the ¥ 110 mark for the first time in five months. The yen was recently down 0.3% against the greenback, at ¥ 110.40 to the dollar.

In Japan, exporters caught an updraft from the favorable currency winds as their goods became cheaper to ship around the globe. Chip maker Renesas Electronics was up 6.6%, auto maker Suzuki Motor rose 3.4% and electronics giant Sharp added 1.7%.

Across the region, financial stocks got a further boost as investors continued their bets that a Donald Trump presidency could see looser banking regulations and higher interest rates. The S&P/ASX 200 financials subindex in Australia was 0.3% higher, while Japan's Topix bank subindex increased 0.7%.

However, shares in Asian emerging markets faced further selling pressure, with analysts expecting more declines given that rate increases will likely spur a flight of capital back to the U.S., as investors search for higher yields.

In Indonesia, the Jakarta Composite Index was last down 0.5%, while the FTSE Bursa Malaysia Index was off 0.3%.

"I expect the broad selloff to continue in emerging markets in Asia because I feel if the rates in the U.S. are really going to go up, there is no point putting your money in risky countries," said Mr. Horchani.

Elsewhere, oil prices slumped as hopes that members of the Organization of the Petroleum Exporting Countries could reach a deal to cut output at their Nov. 30 meeting took a dive.

"The market is lowering expectations regarding the OPEC talk and oil prices dropped back down," said Alex Wijaya, a sales trader at CMC Markets, in a note.

Brent crude, the global price benchmark, was last down 1% at $46.05 a barrel in Asian trade. Shares in oil producers across Asia felt the pinch. Australia's Santos Ltd. fell 1.0%, while Japanese oil and gas explorer Inpex Corp. slipped 1.1%. In Hong Kong, oil major PetroChina Co. declined 1.2%.

Kosaku Narioka contributed to this article.

Write to Ese Erheriene at ese.erheriene@wsj.com

(END) Dow Jones Newswires

November 17, 2016 22:45 ET (03:45 GMT)

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