Foreign buying on hopes for a Japanese recovery nudged most Asian stocks to fresh one-year highs and supported the yen on Thursday, but nerves about possible central bank intervention to stem the yen's rise capped the gains.

Japanese stocks initially edged down as momentum after an 11 percent rise in the last nine trading sessions petered out. But a bullish broker report on Japan's top steel firms helped boost the Nikkei average 0.69 percent to 10,362.69 by the close.

Analysts said foreigners actively snapped up steel makers, eyeing signs of cyclical economic recovery, restructuring and strong Chinese demand. Last week's surprisingly strong Japanese growth data had raised hopes of better earnings and lured foreign investors into the Tokyo market.

It also reassured foreign investors elsewhere in Asia, given Japan still produces 60 percent of regional GDP despite 13 years of economic underperformance.

"Foreign investors are shying from electronics and electronics parts and buying materials firms," said Ken Masuda, senior dealer at Shinko Securities. "It doesn't look like short-term money. Foreigners seem to be buying Nippon Steel."

Nippon Steel rose 6.1 percent to 225 yen.

The broader TOPIX index rose 0.85 percent to 1,009.58 a day after breaking through the psychological 1,000 mark to a fresh 13-month high.

"A revival in foreigners' buying last week seems to suggest a new stage for the market's rise," said Kenichi Hirano, a strategist at Tachibana Securities.

Finance Ministry data showed foreign investors increased their buying of Japanese stocks five-fold last week to 450 billion yen ($3.77 billion) from 91 billion yen the week before.

The yen held near one-month highs against the dollar and the euro it had touched a day earlier, although traders were wary of intervention by Japanese authorities to keep the yen low to support the nation's exporters.

The dollar circled the 118 yen area, down slightly from around 118.10 late on Wednesday in New York. The euro hovered around 130.70 yen, down half a yen on the day.

Elsewhere in Asia, Hong Kong's Hang Seng Index rose 1.16 percent to 10,596.86. But most traders were waiting for market heavyweight Hutchison Whampoa to report an expected 20 percent rise in profits and brief skeptical investors on its $16.7 billion investment in third generation mobile phone networks in Europe.

Taiwan's TAIEX index defied early government fund selling to end up 1.23 percent at a 14-month high of 5,611.86. Foreign funds continued heavy buying of technology stocks like AU Optronics, the world's third-largest contract computer screen maker, which rose its daily limit of seven percent to T$43.70.

South Korea's KOSPI rose 1.35 percent to close at a 13-month high of 747.13 as foreign buyers continued to push the market heavyweight and relatively inexpensive Samsung Electronics up a further 1.5 percent.

Shares in the world's largest memory chip maker and third-largest cellphone maker have risen 69 percent since early February, but are still trading at a price to forecast earnings multiple of 13.6, compared with Sony Corp's 69.9 and Sharp Corp's 39.8.

Australian stocks edged up to near one-year highs.

Gold rose to $366.35/85 in early Asian trade on safe-haven buying after the latest Middle East violence and a weaker U.S. dollar.

Oil futures firmed to $31.13 a barrel as traders eyed lower U.S. crude and gasoline stocks.