China and the US have agreed to hold the next round of trade negotiations in Washington in early October to end the bruising trade war.

Domestic equity market benchmark Sensex rose as much as 223.07 points higher to hit 36,867.49 and the broader NSE Nifty index climbed to as much as 10,906.80 at the strongest level in morning deals.

The 10-year government bond yield was last seen at 6.60 per cent, as against its previous close of 6.58 per cent.

Weakening of the US dollar overseas supported the rupee. The dollar index, which gauges the greenback's strength against six peers, fell 0.01 per cent to 98.40.

However, sustained foreign fund outflows and rising crude prices kept the gains in the rupee in check.

Foreign institutional investors (FIIs) remained net sellers in the capital market, pulling out Rs 561.17 crore on Thursday, provisional data from the National Stock Exchange showed.

Crude oil prices strengthened on Friday, with Brent crude futures - the global benchmark - rising 0.25 per cent to $61.10 per barrel.

Analysts expect the rupee to track trends in the Asian currencies in the near term. "Rupee is expected to follow movement of Chinese currency as it has been doing since August," said VK Sharma, head PCG & capital markets strategy, HDFC Securities.

The rupee has witnessed a significant decline since the start of this year amid sustained foreign fund outflows and weak macroeconomic environment.