Japan's Topix hits highest since 1990 as Asia-Pacific markets rise; yen hits fresh 38-year low

• Japan's industrial production grew 2.8% month on month in May, beating expectations of 2% from economists polled by Reuters.
• Headline inflation for Japan's capital city of Tokyo accelerated to 2.3% year on year in June, up from 2.2% in May.
• The yen hit fresh 38 year lows against the greenback, weakening to as low as 161.27 against the dollar.

Asia-Pacific markets climbed on Friday as upbeat economic data from Japan sent the country's Topix stock index to a 34-year high, while investors awaited U.S. inflation readings due later in the day.

The Japanese yen hit fresh 38-year lows against the greenback, weakening to as low as 161.27 against the dollar. Japan replaced Masato Kanda with Atsushi Mimura as its top currency diplomat, according to Nikkei.

Headline inflation for Japan's capital city of Tokyo accelerated to 2.3% in June from a year earlier, up from 2.2% in May. The core inflation rate —which strips out prices of fresh food — rose to 2.1% from 1.9% in May.

Tokyo inflation data is widely considered to be a leading indicator for nationwide trends.

The country's industrial production grew 2.8% month on month in May, beating expectations of 2% from economists polled by Reuters. On a year-on-year basis, industrial production rose 0.3%.

Japan's Nikkei 225 rebounded 0.64% to close at 39.583.08, while the broad-based Topix rose 0.57% and hit a 34-year high at 2,809.63.

Both the readings will provide Japan more room to tighten its monetary policy at a time when its currency has plummeted to multi-decade lows.

South Korea saw its retail sales for May slip 0.2% year on year, a softer fall compared to April's revised figure of a 0.8% drop. This is the first time since July 2023 that South Korea has recorded two straight months of declines.

South Korea's Kospi inched up 0.49% to 2,797.82, and the small-cap Kosdaq closed 0.21% higher at 840.44.

Hong Kong's Hang Seng index was up 0.36% in its final hour, while mainland China's CSI 300 rebounded off a four-month low to gain 0.22% and finished at 3,461.66.

Australia's S&P/ASX 200 rose 0.1%, paring gains and ending at 7,767.5.

Overnight in the U.S., the S&P 500 eked out a narrow gain as Wall Street looked ahead to fresh inflation data to assess when the Federal Reserve will begin lowering interest rates.

The U.S. is expected to release its preferred inflation gauge, the personal consumption expenditure index on Friday.

The broad market index closed marginally higher at 0.09%. The Nasdaq Composite added 0.30%, while the Dow Jones Industrial Average inched up 0.09%.

—CNBC's Hakyung Kim and Sarah Min contributed to this report.