Japanese shares rose on Friday after US President Donald Trump and Chinese President Xi Jinping agreed to resume trade talks, easing tensions over tariffs and rare earth supplies.

The Nikkei 225 rose 0.5%, or 187.12 points, to end at 37,741.61.

Trump said the US-China trade deal was "in very good shape" after a recent call with Xi Jinping, with more talks planned "shortly." He cited progress on rare earth magnets and other issues, calling the discussions "very complex stuff" that had been "straightened out."

US Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick and Trade Representative Jamieson Greer will lead the upcoming negotiations.

In economic news, Japan's average household spending in April fell 0.1% in real terms but rose 4% in nominal terms to 325,717 yen, government data showed on Friday. The reading missed expectations for a 1.4% increase and followed 2.1% growth in March.

Spending rose on housing, recreation and education, but declined for medical care, clothing and other items. Average household income was flat in real terms but up 4.1% nominally at 589,528 yen.

On the corporate front, Financial Products Group (TYO:7148) signed a 7.8 billion yen unsecured loan deal to fund its domestic real estate business. The loan, due in May 2026, includes covenants on net assets and profit.

H.I.S. (TYO:9603) designated its Dubai-based unit a specified subsidiary to tap Saudi tourism. The subsidiary holds capital of 1.37 billion yen.

Japan Post (TYO:6178) will attend a June 18 hearing over missed roll calls that may lead to its trucking permit being revoked.