Positive economic data from the US cheers investors

Asian markets rose on Friday, extending their rally as fears over the Omicron coronavirus variant faded and further positive economic data from the United States cheered investors.

Studies indicating Omicron infections are less likely to result in hospitalisation and US approval of drugs from Merck and Pfizer to add to a growing arsenal of weapons against Covid have increased confidence that the pandemic will have less impact on the economy.

"Omicron is looking more like a short-term disruption to the economic outlook and not a destructive headwind that knocks the economy off its course," said OANDA's Edward Moya.

On Wall Street, the S&P 500 ended the last session before the holiday weekend at a fresh record following a raft of mostly decent US economic data.

Commerce Department data showed consumer spending climbed in November, though at a slower rate, and new home sales rose.

Jobless benefit claims held steady from the prior week and orders for big-ticket manufactured goods climbed, though mostly due to aircraft.

Inflation, however, posted the biggest increase in nearly four decades, illustrating the delicate balancing act the Federal Reserve faces between reining in inflationary pressures and keeping the economic recovery on track.

Omicron "will create some slowdowns in the economy, perhaps some slowdowns of production which could add to inflation pressures in the short term," Paul Christopher, head of global market strategy at Wells Fargo Investment Institute, told Bloomberg Television, adding however that the economy would work its way through the situation.

The optimistic mood carried over to Asia, with most markets rising, although in thinner trade with several stock exchanges shut or on shortened sessions ahead of the Christmas holiday.

Tokyo and Hong Kong were both up 0.1 percent while Sydney, Seoul, Singapore and Bangkok also enjoyed gains. Shanghai was among the few losers, falling 0.8 percent.

Oil futures were mixed, with WTI heading up towards $74 a barrel while Brent eased to $76.55.