Asian shares crawl higher, capped by worries over Europe

MSCI pan-Asia index up 0.1%, Nikkei opens with 0.6% gain

Asian shares inched higher on Friday, helped by a slight uptick in US shares overnight that encouraged investors to return cautiously to buy up bargains after recent slides, but weak global data and Europe's fiscal woes limited the gains.

The MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.1%. On Thursday, it nearly broke below a five-month low touched last week, as worries about a possible Greek exit from the euro zone continued to weigh on the market.

The pan-Asia stock index has so far this month nearly wiped out all of the gains it scored early in the year.

Japan's Nikkei stock average opened up 0.6%.

"Stocks are looking a bit oversold from a technical point of view, and there might be some adjustments ahead of the weekend," said Hiroichi Nishi, equity general manager at SMBC Nikko Securities, in Tokyo.

Global stocks eked out gains on Thursday but the euro fell to its lowest since July 2010, at $1.25155, and the dollar index measured against key currencies hit a 20-month high of 82.376.

Concerns about growth and a failure by European policymakers to make any significant breakthroughs to resolve the debt crisis have been strengthening demand for highly rated government bonds. Germany's 10-year government bond yield fell to a record low of 1.35% on Thursday.

"Global capital markets are now integrated. This leads to global industry factors having a pervasive influence Pan-Asia," said Macquarie in a research note.

"The best investment opportunities are often to be found through themes and at the individual stock level. Another investment approach is to break out of the top-down macroeconomic straightjacket that flows from the global business cycle through broad economic sectors and instead look for common earnings drivers and themes bottom-up," it said.

The euro was steady on Friday around $1.2536, but remained pressured by the unclear outlook for Greece.

A poll on Thursday showed Greece's anti-bailout leftist SYRIZA party was maintaining its lead ahead of a June 17 election which will determine whether the country remains inside the common currency bloc.

Asian credit markets were firmer early on Friday, with the spread on the iTraxx Asia ex-Japan investment-grade index narrowing by 2 basis points.

Data from the United States, China and Europe on Thursday only underscored the damage the euro zone's fiscal plight has inflicted on growth globally.

US jobless claims were little changed in the week ended on Saturday, while a key category of durable goods orders seen as a proxy for business spending declined.

Manufacturing activity in the euro zone in May shrank to its lowest reading since June 2009 and the guide to growth in Europe's powerhouse Germany also contracted in May, pointing to deteriorating growth ahead.

Slowing external conditions were reflected in China's HSBC Flash PMI, which fell in April as export orders eased to two month lows, marking the seventh straight month that the index has held below 50 and signalling that the economy would remain sluggish throughout the first half of the year.

Oil retained its gains, with US crude futures up 0.2% at $90.83 a barrel and Brent futures up 0.3% at $106.83 a barrel on Friday.

(Additional reporting by Dominic Lau and Lisa Twaronite in Tokyo; Editing by Edmund Klamann