TOKYO, Jan 10 (Reuters) - Japanese shares rose on Friday, as demand for riskier assets increased buoyed by de-escalation of tensions in the Middle East and hopes that the Phase 1 U.S.-China trade agreement will boost corporate earnings.
By 0148 GMT the benchmark Nikkei index was up 0.16% at 23,777.03 points. The index was on course for a 0.5% gain this week, which was full of volatility after an Iranian missile strike on U.S.-led forces in Iraq on Wednesday rippled through global financial markets.
The attack initially sparked fears of a wider conflict over the U.S. killing of a prominent Iranian general last week.
However, global equity markets quickly stabilised after both the United States and Iran signalled they want to avoid a full-blown war.
The market focus is now on the signing of a Phase 1 trade deal between the United States and China scheduled for Jan. 15 to defuse a months-long trade war, which would relieve a huge burden on the global economic outlook.
There were 116 advancers on the Nikkei index, against 103 decliners on Friday, while the remaining six remained unchanged.
The largest percentage gainers in the index were convenience store operator Seven & i Holdings Co Ltd, up 4%, followed by industrial machinery maker IHI Corp that gained 3.85%, and rival convenience store operator FamilyMart Co Ltd, trading 2.43% higher.
The largest percentage losers in the index were apparel retailer Fast Retailing Co Ltd, down 2.98%, followed by Mitsui Mining and Smelting Co Ltd, which lost 1.97% and Chubu Electric Power Co Inc, trading 1.96% lower.
Fast Retailing cut its full-year outlook due to worse-than-expected quarterly results on Thursday, hit by Hong Kong protests and a South Korean consumer boycott that dented sales at its Uniqlo stores.
The broader Topix index rose 0.2% to 1,732.50.
The volume of shares traded on the Tokyo Stock Exchange's main board was 0.48 billion, compared to the average of 1.12 billion in the past 30 days. (Reporting by Stanley White; Editing by Rashmi Aich)