By Chao Deng and Brad Frischkorn

HONG KONG--Japanese markets were rocked Friday after the Bank of Japan surprised investors by aggressively expanding its stimulus measures, sending the yen plummeting to a near seven-year low and boosting stocks.

The Nikkei Stock Average gained 4.8% to close at 16413.76, its highest level in nearly seven years, and was back in positive territory for 2014, after the central bank's move to add to Japan's asset purchases, its main tool to spur higher inflation. The unexpected move underscored how Prime Minister Shinzo Abe's economic revival plan has gotten off track since a national sales tax increase in April this year damped consumer spending.

The BOJ said it would buy more Japanese government bonds, and triple the pace of its purchases of stock and property funds, to help revitalize the sluggish economy.

"This is very much a shot in the arm for [Mr. Abe] to put his policies on track," said Petr Kocourek, senior portfolio manager at First State Investments in Singapore, who added that he sees more upside for Japanese equities going forward.

With this move, "[Japan's] economy would be better able to withstand the negative impact from a [second value added tax]" that is expected to be announced in December, said William De Vijlder, an economist at BNP Paribas.

Japan shares, which saw their strongest one-day move in over a year, also got a boost from reports that Japan's $1.2 trillion Government Pension Investment Fund's planned to slash its target allocation for domestic bonds from nearly 60% to closer to half that figure over the medium to long term.

The lower proportion of bonds was interpreted as meaning a higher-than-expected stock allocation may be on the way. The GPIF's actual figures--released after the market close--were in line with the new market expectations; the fund said it would raise its allocation to domestic stocks to 25% from 12% previously, and cut its domestic bond allocation to 35% from 60%.

The U.S. dollar (USDJPY) rose to as high as Yen111.54 in Asia trade, its strength a boon for Japanese exporters because it makes goods sent overseas cheaper for foreign buyers. Late Friday in Asia, it traded near its level in January 2008, and was at Yen111.43, compared with Yen109.22 late Thursday in New York.

Stocks were higher across rest of the region, from Hong Kong, where the Hang Seng Index was up 1.3% at 23998.06, to Australia, where the S&P/ASX 200 was up 0.9% at 526.60.

Asian shares also got a boost after the U.S. Commerce Department estimated on Thursday that U.S. economic growth was slightly better than expected, at an annualized 3.5% for the July to September period.

"Anything that helps to dispel fears that the U.S. economic recovery is not on pace is encouraging for stock investors," said Naoki Fujiwara, fund manager at Shinkin Asset Management.

China shares were up thanks to strong bank earnings. Bank of China Ltd. was up 0.8% after it said that its third-quarter net profit rose 5% on-year, and Agricultural Bank of China jumped 0.8% after the lender announced a 6% gain in net profit over the same period.

In Shanghai, stocks were up 1.2% to 2420.18, a fresh 20-month high. The Shanghai Composite index gained more than 5% for the week, its best week since February 2013.

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