HONG KONG - Asian stocks rose on Friday, with Japan's Nikkei up 4 percent, helped by a smaller-than-expected decline in U.S. retail sales and hopes that the largest U.S. banks will survive without a government takeover.

The Swiss franc was stable after notching up its biggest ever one-day drop against the euro on Thursday following news the Swiss National Bank sold francs in a bid to boost the economy, leaving some analysts wondering if this was the first shot in a currency war for trade competitiveness.

Citigroup Inc told Reuters the bank does not need any more emergency cash from Washington and expects to stay private, while Bank of America said it was profitable in January and February, easing fears about further instability in the banking industry and sparking a rush back into equities.

The economic situation seems to be better than what people were saying at the beginning of the year -- a view that has come about now that it seems that U.S. banks' earnings may not be atrocious, said Masaru Hamasaki, senior strategist at Toyota Asset Management in Tokyo.

Yet for every piece of news that improved investors' confidence, there was another that left questions about the sustainability of the market rebound.

For example, Wall Street chalked up its best three-day run since November after Standard & Poor's raised its outlook on General Electric Co's credit ratings to stable from negative, though it stripped the company of its AAA status.

On the other hand, Berkshire Hathaway , Warren Buffet's conglomerate, lost its AAA rating and has a negative outlook from Fitch Ratings.

The Nikkei <.N225> led the charge in Asia, climbing 4.5 percent, and was well on its way to the biggest weekly gain of the year. Shares of large Japanese banks were outperformers, with Mitsubishi UFJ Financial Group <8306.T> up 6.3 percent and Mizuho Financial Group <8411.T> rising 5.3 percent.

The MSCI index of Asia Pacific stocks outside Japan <.MIAPJ0000PUS> rose 2.1 percent and hit its highest in about two weeks.

The materials and financial sectors were the biggest boosts.

BOLD SWISS MOVE

The euro was relatively unchanged on the day against the Swiss franc at 1.5327 francs, while the U.S. dollar was also steady at 1.1870 francs.

The Swiss National Bank stunned markets overnight with intervention to weaken the Swiss franc as well as an interest rate cut as it forecast a deep recession.

The policy change was the first intervention in currency markets by an advanced economy since the financial crisis broke out in the summer of 2007 and marked a new chapter in a global fight against deflation.

The move has also started a game of guessing who will follow the SNB's lead.

The most obvious candidate for combining quantitative easing with intervention in the FX markets is the Bank of Japan, simply because the BoJ has the historical precedent of intervening in the past, UBS currency strategists said in a note.

U.S. crude futures dipped back under $47 a barrel after rocketing 11 percent higher overnight following a not-so-dire U.S. retail sales report for February. Crude for April delivery slipped 0.5 percent to $46.77 a barrel.

Japan Retail sales Nikkei 225