By Chao Deng 

Shares in Japan rebounded Friday after a pledge by Japanese Prime Minister Shinzo Abe to strengthen the country's economy, while markets elsewhere mostly fell amid the prospect of higher rates in the U.S.

Japan's Nikkei Stock Average finished up 1.8%, with the benchmark rallying from negative territory in the midmorning.

The gains came as Japanese Prime Minister Shinzo Abe announced an ambitious goal to expand the nation's economy by around a fifth, though he didn't say exactly how or when that growth would be achieved.

The announcement, at a news conference where Mr. Abe was officially appointed to another three-year term as party leader, comes as Japan's economy is sputtering, fueling questions about the success of his Abenomics growth program.

Mr. Abe said he would aim to increase the size of Japan's economy to Yen600 trillion ($5 trillion), from around Yen490 trillion in the latest fiscal year. "Creating a strong economy will continue to be my top priority," he said.

The comments also follow Japanese government data showing that consumer prices fell for the first time in over two years in August, the latest setback for Mr. Abe's campaign against deflation. The country's core consumer-price index, which excludes fresh food, fell 0.1% from a year earlier, could spur the central bank to more action in pursuit of its 2% inflation goal.

Elsewhere, the region's market were closing out the week with losses, after weak Chinese manufacturing data on Wednesday renewed concerns about the ripple effects of its slowing economy. Shares in Malaysia, Hong Kong, Taiwan and Indonesia are all down more than 3% this week. Earlier this month, worries about China's devaluation of the yuan in August abated and volatility in Chinese domestic shares subsided.

On Friday, markets finished mixed, as investors assessed the latest clues on when the Fed might increase rates.

The S&P ASX 200 fell 0.6%, giving up gains from earlier in the day. Although the ASX 200 managed to wrap up the week above Wednesday's two-year low, it has fallen nearly 15% from its late-April high.

South Korea's Kospi fell 0.2% and the Shanghai Composite Index lost 1.6%. Hong Kong's Hang Seng Index, meanwhile, gained 0.4%.

Markets in Australia, Hong Kong, Taiwan and South Korea are closed next Monday.

In a speech Thursday at the University of Massachusetts in Amherst, Federal Reserve Chairwoman Janet Yellen laid out her most detailed argument yet for the central bank to begin raising short-term interest rates in the coming months, saying that inflation pressures will build gradually over the next few years. The prospect of higher rates threatens to draw capital to the U.S. from emerging markets as investors search for yield.

"There was a strong positive reaction to Janet Yellen's comments initially...but then markets had second thoughts," said Shane Oliver, head of investment strategy at AMP Capital. At the end of the day, "she's still talking about hiking rates."

Some investors and analysts interpreted the Fed's decision last week to keep near-zero rates unchanged as a signal it believed global economies weren't yet strong enough to withstand a rate increase. The uncertainty about the timing continues to cause swings in global markets. Years of low interest rates since the global financial crisis fueled stock rallies in the U.S. and elsewhere.

"We're still seeing these ongoing outsized reactions to whatever the Fed says," added Mr. Oliver.

Currencies in the region mostly fell on the back of a stronger dollar on Friday.

The Japanese yen was last down 0.3% at Yen120.46 against the U.S. dollar.

The Malaysian ringgit hit a fresh 17-year low of 4.39 against the U.S. dollar, while the Indonesian rupiah reached a new 17-year low of 14,700 per U.S. dollar.

The Australian dollar fell to as low as US$0.6975, before rebounding. It was last at US$0.7030. The currency has been heading toward a six-year low, reached earlier this month.

The New Taiwan dollar strengthened slightly after hitting a six-year low Thursday, when country's central bank lowered interest rates for the first time since 2009. The New Taiwan dollar last traded at 32.03 per U.S. dollar.

Gold prices were last down 0.7% at $1,146.20 a troy ounce. Still, gold prices have rallied to their highest level in a month recently as losses in U.S. stocks and weaker economic data pushed some investors to buy the metal as a haven.

Brent crude oil was last up 0.6% at $48.47 in Asia trade.

Markets in India and the Philippines were closed for holidays Friday.

Robb M. Stewart contributed to this article.

Write to Chao Deng at Chao.Deng@wsj.com

(END) Dow Jones Newswires

September 25, 2015 04:32 ET (08:32 GMT)