Advancers led decliners 768 to 680, with 156 stocks unchanged. Volume stood at 1.370 billion shares, from 1.343 billion on Thursday.
"Retail investors, who made profits in small-caps previously, have now turned to large caps on expectations the (downtrend in the) domestic economy will have bottomed after April," Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management, said.
"Investors are turning more bullish about the outlook for the Japanese economy and corporate profit trends despite the recent (weaker-than-expected) GDP data and a series of profit warnings," Marusan Securities market analyst Masaru Ueda, said.
Despite the weak gross domestic product (GDP) data which showed the country in recession for most of 2004, the Bank of Japan Thursday left unchanged its assessment, saying the economy continues to recover.
Among notable gainers were construction shares, with Obayashi up 14 yen or 2.2 percent at 646 and Shimizu ahead by seven yen or 1.4 percent at 525.
Japan's largest real estate firm Mitsui Fudosan was up 36 yen or 2.8 percent at 1,318, while Sumitomo Realty rose 29 yen or 2.2 percent to 1,374.
High-tech firms were up, with NEC ahead 16 yen or 2.5 percent at 654 and NEC Electronics up 120 yen or 2.1 percent at 5,760. Fujitsu rose 10 yen or 1.5 percent to 667.
UFJ Holdings was up 10,000 yen or 1.8 percent at 579,000 while Mitsubishi Tokyo Financial Group fell 10,000 yen or one percent to 963,000.
Japan Tobacco was up 40,000 yen or 3.8 percent at 1.1 million. The world's third-largest cigarette company reported a strong turnaround in earnings for the nine months to December after the market close Thursday.