Asia-Pacific markets rise as investors assess Japan economic data and await U.S. inflation reading; yen hits fresh 38-year low

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• 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 investors assessed key economic data out of Japan and 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.

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%.

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.

Japan's Nikkei 225 rebounded 0.6% after the data, while the broad-based Topix rose 0.66%.

South Korea's Kospi inched up, and the small-cap Kosdaq was trading just above the flatline.

Australia's S&P/ASX 200 gained 0.63%.

In contrast, Hong Kong Hang Seng index futures were at 17,524, lower than the HSI's last close of 17,716.47. The index had hit a near two-month low on Thursday.

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.