By V. Phani Kumar

Asian shares rallied Friday to hand weekly gains to most markets in the region, with shipping stocks leading for another day and miners rising on hopes demand for commodities might be picking up.

China's Shanghai Composite rallied 4%, delivering its best performance this week, on optimism the country's economy will be among the first to recover from the global downturn. The benchmark ended the week with nearly 10% gains as stocks rose across sectors.

"One can say China is a semi-open market, so it is less affected [by the global economic downturn] as compared to markets in the so-called capitalist countries. If there's a revival, they'll bounce faster. I don't expect a revival in the short-term but maybe in 2010," said Peter Lai, director at DBS Vickers in Hong Kong.

Japan's Nikkei 225 closed up 1.6%, South Korea's Kospi jumped 2.8%, Taiwan's Taiex climbed 2.5% and Hong Kong's Hang Seng Index added 3.6%, with each of them also posting weekly gains.

Australia's S&P/ASX 200 advanced 1.2%, while in afternoon trading India's Sensex gained 2.2% and Singapore's Straits Times inched up 0.6%. Still, having lost much ground earlier in the week, they ended or were set to close the week in the red.

"The more resilient tone to markets suggests a lot of bad news has been priced in already," said analysts at Calyon, noting the rise in U.S. stocks Thursday despite a downbeat report on weekly jobless claims. "The tone of improving risk appetite is likely to continue but the risks remain considerable, with significant potential for disappointment."

Some analysts warned Asia's gains might fade, especially with January U.S. non-farm payrolls on the slate later, forecast in a Dow Jones Newswires poll to show a loss of 525,000 jobs.

Markets were also awaiting progress on U.S. President Barack Obama's fiscal stimulus plan, while Treasury Secretary Timothy Geithner was expected to announce a bank rescue plan on Monday.

Shippers extend rally

Shipping and commodity stocks were helped by another surge in the Baltic Dry Index, a measure of shipping rates for dry bulk and an indicator of global demand. The index rose 13.8% Thursday and tallied gains of 28.4% in the past two days, though it's still well down from record levels hit in mid-2008.

But some analysts warned the BDI could overextend itself given a lack of fundamental evidence that China's demand for commodities has improved significantly. Some have said the BDI bounce might be due more to hedge funds covering short positions on forward-freight agreements.

Delta Asia's head of equities in Hong Kong, Conita Hung, said it wouldn't be wise to chase shipping stocks.

"My reading is this is more related to speculative interest, as the economic outlook remains sluggish and it's not logical to see such an uptrend," she said.

ANZ commodity strategist Mark Pervan added the rise in the BDI didn't necessarily mean a more positive tone for commodities. Aluminum and copper stocks in LME-approved warehouses were high and markets needed an inventory turnaround to confirm an improvement in demand, he said.

That wasn't stopping the shipping sector, however, with Korea's STX Pan Ocean (SPNOF) gaining 4.9%, while Nippon Yusen (NPNYY) added 1.2% and Kawasaki Kisen advanced 1.3% in Tokyo. In Singapore, Neptune Orient Lines (NPTOY) gained 1.6% by late afternoon, while STX Pan Ocean surged 7.5%.

There was a carryover effect on commodity stocks, with Australia's BHP Billiton (BHP) up 1.9% and Newcrest Mining (NCMGY) up 5.7%.

Other movers

Regional technology stocks were helped by a 2.1% rise in the Nasdaq Composite (RIXF) overnight, with Tata Consultancy Services climbing 4.6% and Wipro (WIT) adding 2.3% in Mumbai trading. Earlier in the day, Samsung Electronics (SSNLF) rose 4.6% in Seoul and Taiwan Semiconductor Manufacturing (TSM) jumped 5.4% in Taipei.

News Corp. (NWS) shares fell 4.1% in Sydney, though, and the stock dropped 4.9% after-hours in the U.S. The company, which owns Dow Jones & Co., publisher of the Wall Street Journal, Dow Jones Newswires and MarketWatch, swung to a fiscal second-quarter loss on $8.4 billion in write-downs, and it slashed its outlook for fiscal 2009 operating income.

Among Australian financials, National Australia Bank (NABZY) slipped 0.8% after it warned bad debts were on the rise.

Hong Kong's market was lifted by gains in China-related stocks, though PCCW (PCCWY) slipped 2.9% after resuming trade. Trading was suspended Thursday as officials with Hong Kong's Securities and Futures Commission said they would launch an inquiry into the voting results after shareholders approved a $2.1 billion buyout offer from a group led by its chairman Richard Li.

Shanghai posted across-the-board gains, with auto stocks faring especially well, after a Shanghai Securities News report that Beijing might subsidize farmers' vehicle purchases. SAIC Motor added 4.9%.

Malaysian shares were up 1.6% and Philippine shares 2.7% higher, while Indonesia's market rose 1.5% by late afternoon. New Zealand markets were closed for a holiday.

In currency markets the euro retained a mild downward bias amid concerns about the euro-zone outlook; it was recently around $1.2794, from $1.2798 late in New York, and at 116.70 yen, from 116.76 yen.

The U.S. dollar was trading near 91.17 yen, versus 91.18 yen in New York and off an overnight high of 92.25 yen.

February gold futures fell 60 cents to $913 a troy ounce, with front-month Nymex crude oil down 46 cents to $40.71 a barrel on Globex.