Japanese shares were likely to rack up further gains next week on a weakening yen, analysts said, after the Nikkei 225 index finished at a three-month high on Friday
In the week to August 17, the benchmark Nikkei at the Tokyo Stock Exchange advanced 3.05 percent, or 271.06 points, to 9,162.50, while the Topix index of all first-section issues rose 2.55 percent, or 19.02 points, to 765.81.
The gains followed solid US economic data and a renewed German commitment
to support the European Central Bank's bid to preserve the embattled euro, analysts said.
Another key catalyst for Tokyo's momentum was the yen's weakening against the dollar, a positive for the export-driven Japanese economy.
The greenback changed hands at 79.44 yen late Friday, with some dealers eyeing it to test the 80 yen level.
The Japanese currency - which hit record highs on the dollar last year and remained strong - turned softer as an improving US economic outlook and rising bond yields made the dollar more attractive, analysts said.
The Nikkei index was poised to head north if the yen continues to head south, said Investrust CEO Hiroyuki Fukunaga. "Anything above 80 (to the dollar) could send the Nikkei right through 9,500 resistance, and then to 10,000," he said.
Nomura analyst Shoichiro Yamauchi said technical charts of the Nikkei's movements suggest the index had room to rise.
"The next key juncture is around August 30. The rally should continue until then," he told Dow Jones Newswires. "If things go well, the Nikkei should rise to test 9,500," he said.
The market would not turn its focus to US housing data and minutes from the US Federal Reserve Bank's policy meeting for clues on whether the bank would usher in further easing measures, Daiwa Securities said in a note to clients.
The brokerage added that Greek austerity efforts and Prime Minister Antonis Samaras's meetings with his German and French counterparts next week may boost investor sentiment.
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