An MR element incorporates: a nonmagnetic conductive layer having two surfaces facing toward opposite directions; a free layer disposed adjacent to one of the surfaces of the nonmagnetic conductive layer, wherein the direction of magnetization in the free layer changes in response to an external magnetic field; and a pinned layer disposed adjacent to the other of the surfaces of the nonmagnetic conductive layer, wherein the direction of magnetization in the pinned layer is fixed to the direction orthogonal to the air bearing surface. The MR element does not include any layer provided for fixing the direction of magnetization in the pinned layer. The pinned layer incorporates a ferromagnetic layer made of a ferromagnetic material having a positive magnetostriction constant. A bottom shield gap film and a top shield gap film disposed adjacent to the MR element each have a compressive stress of 600 MPa or greater.