TOKYO: Japan’s Nikkei share average climbed nearly 3% on Friday and was set for its best week in more than four years, as strong US retail sales data soothed fears of a recession in the world’s largest economy and Japan’s top trading partner.

The Nikkei had risen 2.9% to 37,800.42 by the midday break, hitting its highest since Aug. 1, while the broader Topix was up 2.4% at 2,663.38.

For the week, the Nikkei has risen nearly 8%, on track for its biggest weekly gain since early April 2020, buoyed by easing concerns about the state of the US economy, a pause in the yen’s rapid appreciation and a pick-up in Japan’s economic growth.

Wall Street’s main indexes closed higher on Thursday after US retail sales increased 1% in July following a downwardly revised 0.2% drop in June.

The Philadelphia SE Semiconductor index finished nearly 5% higher, providing fresh momentum to Japan’s big name chip-related shares.

Tokyo Electron gained 3.8% and Advantest added 5.4%.

Meanwhile, the yen weakened against the dollar overnight in a boost to Japan’s export-related shares like automaker Toyota Motor, which rose about 2%.

The Nikkei fell more than 12% on Aug. 5 in its biggest single-day decline since Black Monday amid a storm of concerns, including US recession fears sparked by a weak jobs report and a sharply stronger yen.

Japan’s Nikkei rises as solid economic growth

It has since clawed back those losses but remains well off an all-time peak of 42,426.77 touched in mid-July.

“The market is gradually recovering from last week’s shock but I don’t think we’ll see it completely shaken-off until the August nonfarm payrolls data,” said Kyle Rodda, a senior financial market analyst at Capital.com.

“That will tell us whether the sell-off was a knee-jerk reaction or a rational response to a meaningful growth shock.”

Among individual shares on Friday, Nikkei heavyweight Fast Retailing was up 4.9%. Electrical component maker Fujikura rallied 9.2% to become the biggest percentage gainer.