Japan's Nikkei share average ended nearly 3% higher on Friday, as investors scooped up stocks after U.S. President Donald Trump touted a possible peace deal with Iran.

The Nikkei closed up 2.81% at 66,020.04 after rising as much as 4.4% earlier in the session. In ‌a volatile ⁠week, ⁠the index was down 0.85% for the week, snapping a three-week winning streak. The broader Topix gained 1.35% to 3,881.96. Trump on Thursday said the U.S. and Iran could sign a peace deal as soon as this weekend that would reopen the Strait of Hormuz to shipping, but Iran countered that it had not reached a ⁠final decision on ‌an agreement.

Chip-related shares led the Nikkei's gain, with Advantest and Tokyo Electron jumping 8.54% and 7.26%, respectively. Bank shares rose ⁠ahead of the Bank of Japan's policy meeting next week, where the central bank is set to raise the policy rate to a 31-year high of 1%.

Mitsubishi UFJ Financial Group and Mizuho Financial Group rose 0.67% and 2.29%, respectively. For the year so far, the bank index is up 30% and at the same level as in mid-February, before the Middle ‌East war broke out.

It underperforms a 68% gain of the nonferrous sector , where makers of fibre-optic cables such as Fujikura and Furukawa Electric, used ⁠by AI data centres, belong.

"This signals the instability of the equity market. Investors have not yet started rotating their targets toward a wide variety of stocks," said Takamasa Ikeda, a senior portfolio manager at GCI Asset Management.

Staffing agency Recruit Holdings and electronic component maker Murata Manufacturing fell 3.27% and 4.58%, respectively, to weigh on the Nikkei the most.

Camera and audio equipment maker Sony Group fell 2.29%.