Record Wall Street boosts sentiment; activity subdued

By Chikako Mogi

TOKYO (Reuters) - Asian shares edged higher and the euro steadied on Friday after banks in Cyprus reopened to relative calm -- a development that helped the S&P 500 stock index notch up a record closing high overnight.

But overall trade was subdued with many Asian markets, including Australia, Singapore and Hong Kong closed on Friday for Easter holidays.

The MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.1 percent. South Korean shares added 0.8 percent on the back of the S&P rally, while Shanghai shares were up 0.3 percent in early trade.

The Nikkei stock average was up 0.2 percent.

"Investors' risk-off stance has receded," said Yoshiyuki Kondo, an analyst at Daiwa Securities, but he added that investors in Tokyo may not build large positions before the weekend and on the last trading day of Japan's fiscal year.

The euro was at $1.2821, hovering near a four-month low of $1.2750 touched on Wednesday. The euro's relative resilience on Friday weighed on the dollar against a basket of key currencies, sending the dollar index down 0.4 percent to 82.928 and further away from Wednesday's 7-1/2 month peak of 83.302.

"There is little incentive to move markets, barring any surprise news, and I expect currencies to trade in ranges for the rest of the day," said Junya Tanase, chief FX strategist at JPMorgan Chase Bank in Tokyo.

The fairly orderly reopening for banks in Cyprus after the island nation received a controversial 10 billion euro bailout that taxed large depositors, reduced safe-haven demand for U.S. Treasuries and gold.

Data showing a steep decline in U.S. Midwest manufacturing revived some concerns the U.S. economy might slow in spring and summer as it did in the previous three years.

But expectations for continued global growth were bolstered after robust retail and labour market figures out of Germany and a higher revision for U.S. fourth quarter gross domestic product growth.

Uncertainty remained over the euro zone, with signs of economic deterioration mounting, after an unexpected rise in German unemployment in March and the lack of a government in Italy following inconclusive elections.

(Additional reporting by Ayai Tomisawa in Tokyo; Editing by Edwina Gibbs)