Tokyo's key Nikkei index surged on Friday to cap a strong week on the back of strong U.S. economic data and a weaker yen against the dollar.

The 225-issue Nikkei average added 3.64% to end the session at 38,062.67, a gain of 8.7% over the week. The broader Topix ended the day up 2.99% at 2,678.60.

"Concerns over the U.S. economy receded after (data showed that) retail sales in the United States in July were stronger than market expectations," Iwai Cosmo Securities said.

"The Nikkei index started with strong gains following a surge in all three U.S. main indexes," a trend that continued throughout the day, the brokerage said.

On Wall Street, the Dow Jones Industrial Average rose 1.4% on Thursday while the broad-based S&P 500 added 1.6%.

The tech-focused Nasdaq Composite Index surged by 2.3%.

This came after U.S. retail sales rose 1.0% in July from June, exceeding expectations and reassuring investors about the health of the world's biggest economy.

The dollar rose more than 1% against the yen after the retail sales report was released.

In Tokyo, the dollar fetched ¥148.97 on Friday.

Among major shares, exporters were higher thanks partly to the weaker Japanese currency, with Toyota soaring 3.27% to ¥2,744.5 and Honda rising 2.42% to ¥1,584.

The Nikkei plunged more than 12% last Monday on worries about the U.S. economy and a stronger yen, before soaring more than 10% the following day.