New Zealand shares rose Friday as hopes for bigger rate cuts next year grew, while Asian peers were relatively muted ahead of key US inflation data.

The S&P/NZX 50 Index rose 1.2%, or 149.96 points, to close at 12,904.11.

Following a bigger-than-expected 1% contraction in third-quarter gross domestic product, the market will now weigh up the odds of a cut between 50 basis points (bps) and 75 bps, rather than 25 bps versus 50 bps, said ANZ Research. Analysts also floated the likelihood of reducing the official cash rate's track to further stir the economy.

Meanwhile, Asian equities were mostly mixed ahead of the release of the US personal consumption expenditures data for November. Both the Nikkei 225 and Hang Seng were little changed in recent trade; Shanghai's SSE gained 0.5%.

In other domestic news, New Zealand's trade deficit narrowed to NZ$437 million in November from NZ$1.66 billion in October as goods exports climbed past 9%, Stats NZ data showed Friday.

The ANZ-Roy Morgan Consumer Confidence Index rose to 100.2 in December from 99.8 in November.

Total credit card spending fell 0.8% month on month to NZ$4.67 billion in November following a 1% increase in October, according to data from the Reserve Bank of New Zealand.

In corporate news, Meridian Energy (NZE:MEL, ASX:MEZ) rose past 5% after it signed non-binding terms sheets with Nova Energy to form a 50-50 joint venture and operate the 400-megawatt Te Rahui solar farm at Rangitaiki near Taupo.

Elsewhere, NZ Windfarms (NZE:NWF) and Genesis Energy (NZE:GNE, ASX:GNE) agreed on a fixed price variable volume contract for difference for Hau Nui windfarm's output. NZ Windfarms lost nearly 3%, while Genesis Energy gained almost 4% at market close.