TOKYO (Reuters) - Asian shares paused on Friday as investors took stock of a four-day rally driven by optimism, yet to be borne out by action, that authorities will soon take the steps needed to ease concerns over the euro zone's debt crisis and weak growth.
MSCI's broadest index of Asia-Pacific shares outside Japan was little changed after rising to a three-month high on Thursday.
"Stocks are overheating and profit-takers will cool things down in the mean time, but momentum is still moving forward from a broader picture," said Lee Young-gon, an analyst at Hana Daetoo Securities.
Japan's Nikkei stock average opened down 0.5 percent, after hitting the psychologically key 9,000 mark for the first time in five weeks on Thursday.
U.S. and European equities rallied for a fifth straight day on Thursday, with the leading index of European shares .FTEU3 nearing a 2012 peak. Indicating a steady rise in risk appetite, the Euro STOXX 50 volatility index, Europe's main gauge of equity market investor anxiety, hit a three-week low.
The euro traded at $1.2297, off Thursday's low of $1.2266 but below a one-month high of $1.2444 hit on Monday.
The euro was pressured on Thursday by the European Central Bank's monthly bulletin which said there were downside risks to the euro zone's economic outlook, with financial market tensions and their potential impact on the real economy posing the main concerns.
While the euro has remained resilient despite the risk of the euro zone debt crisis deepening, its failure in its recent rally to sustain a break above key resistance at the 55-day moving average, now around $1.2400, prompted traders to lock in gains.
The euro has also benefited from investors and traders reducing their dollar long positions ahead of the summer holidays, said Yuji Saito, director of foreign exchange at Credit Agricole Bank in Tokyo.
"There are reasons to be concerned, but a lack of fresh factors or comments from key European figures to prompt further euro selling has led traders to adjust their positions," he said.
Euro zone debt crisis: r.reuters.com/hyb65p
OPTIMISM ON POLICY
Markets have been pinning their hopes on the possibility that the ECB will start buying sovereign bonds to lower borrowing costs for Spain, and that the Federal Reserve will expand its monetary easing, despite suggestions from the authorities that no steps were likely before September.
ECB governing council member Christian Noyer reiterated on Thursday that the ECB was determined to bring down the excessive borrowing costs hurting Spain and Italy and should be ready to intervene decisively in bond markets very soon, adding that a Greek exit from the euro zone was not envisaged.
Demand for safe-haven U.S. Treasuries eased after data showed on Thursday that the number of Americans filing new jobless benefits claims fell last week and the U.S. trade deficit in June was the smallest in 1-1/2 years, as lower oil prices curbed imports.
Saito said markets' view towards U.S. yields may be changing, with Treasury yields inching up on solid U.S. data as firmer growth prospects would scale back expectations for another round of bond buying by the Fed, helping to underpin the dollar/yen.
As investors continue to hunt for higher yields, the Australian dollar neared its lifetime high against the euro on Friday, with the euro trading at A$1.1630, close to its all-time low around $1.1600.
Against the dollar, the Aussie traded at $1.0570 after peaking at $1.0615 on Thursday, its highest since March 20.
China's softening inflation and industrial output data on Thursday reinforced market expectations that Beijing will further loosen monetary policy before the end of September to underpin growth.
China is scheduled to report its July trade data on Friday.
Asian credit markets steadied, with the spread on the iTraxx Asia ex-Japan investment-grade index little changed to stay near a four-month low.
(Additional reporting by Joonhee Yu in Seoul; Editing by Edmund Klamann)