Singapore's Straits Times Index was at four-year highs, led by blue chip Singapore Airlines, which jumped on rising expectations it will win coveted U.S.-Australian routes.

New Zealand's market posted a modest gain, while Australia was flat.

Markets in Japan, China, Hong Kong, Taiwan and several other countries were closed for holidays on Friday.

Increased tensions in Northeast Asia could hurt the yen and the South Korean won, helping to boost the dollar, Mark Cranfield, head of treasury in Asia at Landesbank Baden-Wuerttemberg in Singapore, said.

"The Korean story may turn out to be something worse; it could get nasty," he said.

The won fell to a three-week intraday low versus the dollar early on Friday at 1,038.5.

On Thursday, the dollar had hit a three-month high of 106.86 against the yen after North Korea pulled out of multilateral talks with the United States, Japan, China and South Korea and said it possessed nuclear weapons.

Seoul's Kospi share index fell 0.21 percent to 947.23 on Friday, led lower by a 2.6 percent slide on Hyundai Motor, and other blue chips, as investors digested the North Korea news.

Market heavyweight Samsung Electronics eased about 0.8 percent to 506,000 won. LG Electronics lost about 1 percent.

Australian stocks closed little changed on the day with weakness in bank shares offsetting gains in resource stocks. The S&P/ASX200 ended just 0.01 percent lower at 4174.3.

National Australia Bank fell 1.6 percent after a 4 percent rise on its New York listing. Mining giant BHP Billiton rose, reflecting gains in base metal prices.

Beverages group Coca-Cola Amatil rose 4 percent to A$8.27.

Japanese stock markets were closed on Friday for the National Foundation Day holiday. Tokyo's Nikkei 225 share average had closed at a seven-week high on Thursday as brokerages rallied on news of a possible merger between Daiwa Securities and Sumitomo Mitsui Financial Group.

Views are mixed on the market's outlook after North Korea said late on Thursday that it had manufactured nuclear weapons for self-defence, sparking security concerns.

Next week's Japanese gross domestic product data for October-December, which is expected to show the economy posted another quarter of virtually flat growth, could also put buyers in a reluctant mood.

In Friday trade, European shares are expected to be supported at the open after U.S. blue chips closed at their highest this year on Thursday.

Healthy earnings from top insurer American International Group Inc. helped the broader market, but tech stocks barely rose, weighed by disappointing results from telecom equipment maker Ericsson.

Dell, the world's largest personal computer maker, announced a sales forecast for the current quarter that missed analysts' targets, pushing its stock down 3.3 percent in after-hours trade.

The Dow Jones industrial average was up 0.8 percent at 10,749.61. The Nasdaq Composite Index was up 0.03 percent.

Oil prices steadied around $47 a barrel after jumping 4 percent in New York when the International Energy Agency cut its forecast for non-OPEC supply growth this year, revised upwards estimates of demand and predicted a sharp fall in stocks.

The U.S. dollar stabilized in holiday-thin conditions in Asia, but was seen under pressure on concerns about the trade and fiscal deficits.

The U.S. trade deficit surged to a record $617.7 billion in 2004, although the December shortfall narrowed to $56.4 billion from a November deficit revised down to $59.3 billion.

"It was an enormous number for the whole of last year," said Cranfield.

"On a short-term basis, the euro and the yen were pretty oversold, so the trade figures probably allowed some people to book some profits."

The dollar bought 105.76 yen by 0650 GMT, while the euro was around $1.2871 per dollar, little changed from New York levels.

Spot gold held steady around $417.40 an ounce, in line with the U.S. dollar. Dollar weakness has supported gold by encouraging bullion purchases in other currencies.


Source: http://edition.cnn.com/2005/BUSINESS/02/10/asiastocks.friday.reut/index.html

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