Asian stock markets rallied Friday as comments from the European Central Bank (ECB) president Mario Draghi raised hopes for further central bank action in Europe for the alleviation of the sovereign debt crisis.

Japan's benchmark Nikkei surged 1.46 percent or 123.54 points to 8566.64, Hong Kong's Hang Seng rallied 2.02 percent or 382.17 points to 19274.96 and South Korea's Seoul Composite climbed 2.62 percent or 46.69 points to 1829.16, while India's benchmark BSE Sensex gained 1.24 percent and Chinese Shanghai Composite rose 0.13 percent.

Markets across the globe rallied Thursday after Mario Draghi's statement that the bank is ready to do "whatever it takes" to help support the euro. Draghi suggested that the size of the sovereign risk premium in Spain and Italy was hampering the functioning of the monetary policy transmission channel and therefore came within the mandate of the central bank.

Draghi comments came ahead of ECB policy setting meeting next week and market participants interpreted his comments as a signal that the Bank might restart the sovereign bond purchases under its Securities Market Programme (SMP), which has been inactive for around four months.

“We continue to see bond buying through the SMP as the most likely monetary policy response in the near term given the time-consuming legal procedure and/or political opposition related to any other option, including EFSF bond buying,” said a note from Credit Agricole.

Stock markets in Spain and Italy surged Thursday after Draghi's comments. The Spanish 10-year bond yields declined by 46bps to 6.83 percent and yields on the 10-year Italian bonds dropped nearly as much and settled at 6 percent. The yields started retreating Wednesday after the ECB Governing Council member Ewald Nowotny suggested that Europe's permanent rescue fund could be given a banking license.

Sentiment was also supported by hopes for further monetary incentives from the Federal Reserve. Investors are optimistic that the recent weak economic data, including a slowdown in job creation, coupled with the intensifying crisis in the euro zone, will force policymakers to announce further monetary easing at its policy meeting next week to support the recovery.

"The Fed stands very little chance of achieving its goals on employment without further stimulus," Andrew Wilkinson, chief economic strategist at Miller Tabak & Co, told Reuters.

Exporter companies' shares led the rally in Japan as the euro strengthened against the yen. Canon Inc. advanced 1.94 percent and Pioneer Corp surged 4.27 percent while Toshiba Corp rallied at 4.90 percent.

Financials and resource companies’ shares went up in Hong Kong. HSBC Holdings PLC gained 2.48 percent and China Construction Bank Corp advanced 2.27 percent, while Cnooc Ltd. rose 2.83 percent and China Coal Energy Co. advanced 2.80 percent.

Samsung Electronics led the gains in Seoul after posting a record second quarter earnings. LG Electronics Inc. gained 3.51 percent and Samsung Electronics rallied at 5.20 percent after the world's largest maker of mobile phones said its second quarter net profit jumped to 5.19 trillion won ($4.4 billion) from 3.51 trillion won in the same period a earlier year, aided by the sales of Galaxy smartphones.

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