SYDNEY—Japanese and Chinese markets ended higher in light trade Friday, with investors focusing more on U.S. gains overnight than on data showing a further contraction in China’s manufacturing activity.


ReutersA visitor watched at a ceremony marking the end of trading for the year at the Tokyo Stock Exchange on Friday.

The Shanghai Composite climbed 1.2% to 2199.42, while Japan’s Nikkei Stock Average rose 0.7% to 8455.35, and Hong Kong’s Hang Seng Index closed 0.2% higher at 18434.39in choppy trade.

Elsewhere, India’s Sensex fell 0.6% to 15454.92, Australia’s S&P/ASX 200 index fell 0.4% to 4071.10 in a shortened trading session, while South Korean markets were closed for a holiday.

For the year, all of the top Asian stock indexes were well in negative territory. The South Korean Kospi was off 11% in 2011, with the S&P/ASX 200 down 14.5%, the Nikkei Average 17% lower, the Hang Seng Index down 20%, and the Shanghai Composite 22% in the hole.

Linus Yip, a strategist at First Shanghai Securities in Hong Kong, said turnover was extremely light for the final trading day of 2011.

“Investors remain very cautious due to [global] uncertainty, the European debt problem and the slowing of China’s economy,” Mr. Yip said. “Investors are not willing to enter the market, so the first quarter of next year is a critical time for investor [confidence].”

Friday’s performance in Asia followed a positive finish for Wall Street, with U.S. employment and housing data hinting at a strengthening domestic economy.

U.S. jobless claims rose but held below the crucial 400,000 level for the fourth straight week, with the number filing for benefits during the past month hitting a three-year low.

Also helping sentiment, yields dropped on Italian long-dated debt at a closely watched bond auction Thursday.

Meanwhile, HSBC’s survey of Chinese manufacturing firms, released Friday, showed slightly more weakness than an initial reading earlier this month, with the key index remaining in contractionary territory.

First Shanghai Securities’ Mr. Yip said the result offered a bright side, in that it helped pave the way for further policy easing and stimulus in the world’s second-largest economy.

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