* Shares rise on short-covering after China comments
* Euro dips as rally from near 4-yr lows lacks conviction
* Aussie, NZ dollars cling on to gains after mammoth rally
By Umesh Desai
HONG KONG, May 28 (Reuters) - Asian stocks bolted on Friday
posting their third straight day of gains after China's pledge
to remain invested in Europe boosted confidence, but the euro
dipped after rebounding from near four-year lows the previous
day.
European shares opened higher, with Britain's FTSE 100
<> up 0.5 percent higher, Germany's DAX <> up 0.4
percent and France's CAC 40 <> gaining 0.6 percent.
Oil prices surged to two-week peaks and high yielding
currencies maintained their steep gains made the previous day.
The return of the appetite for risk pushed the Japanese yen
lower, boosting exporter shares in Tokyo.
The MSCI index of Asia Pacific stocks outside Japan rose
2.1 percent <.MIAPJ0000PUS>, adding to the previous day's 2.2
percent gains. It is on track for its biggest weekly percentage
gain since mid-December.
"The market is rejoicing after yesterday's comments (from
China). These are signs of rapid short covering," said Binay
Chandgothia, chief investment officer at fund manager Principal
Global Investors in Hong Kong who oversees $2.2 billion.
"Next week is important to see if the rally will sustain.
Fundamentally some of the concerns are still there -- they
haven't gone away," he said referring to Europe's debt
problems.
Japan's benchmark Nikkei <>, rebounding from a
six-month low on Thursday, rose 1.3 percent in its best
performance in 2 weeks but profit taking capped gains as
investors were reluctant to take big positions ahead of the
weekend.
U.S. financial markets are shut on Monday because of the
Memorial Day holiday.
The Korea Composite Stock Price Index <> (KOSPI)
climbed 0.95 percent as foreigners turned net buyers of stocks
after a nine-session selling streak, which was the longest
since March 2009.
The People's Bank of China said on Thursday a Financial
Times report that Beijing was concerned about its euro-zone
bond holdings due to the European debt crisis was groundless.
[]
The report had driven the euro to a near four-year low
against the dollar and near an 8-1/2-year low against the yen,
and soured risk appetite globally as investors worried that
Europe's debt woes would grow into a larger financial crisis.
Beijing's denial fuelled a rally on Wall Street, with the
benchmark S&P 500 marking the biggest percentage gain in nearly
three weeks.
In Asia, energy <.MIAPJEN00PUS> and financial services
<.MIAPJFN00PUS> sectors were the main outperformers while
defensive sectors like utilities <.MIAPJUT00PUS> and telecoms
<.MIAPJTC00PUS> were laggards.
The euro handed back some gains as worries about Europe's
debt problems returned to haunt investors who sold into the
single currency's strength.
In Asian trade, the euro <EUR=> was down 0.1 percent from
late New York at $1.2298 against the dollar.
"In our view, uncertainty remains in Europe and the sources
of worries could resurface," said a note from Credit Agricole
CIB.
"It could come from the negative economic impact of the
fiscal adjustment or from the sometimes difficult coordination
between the Eurozone's members. There could also be market
talks coming back about the issue of government debt
restructuring."
However the Australian dollar <AUD=D4> and the New Zealand
dollar <NZD=D4> held on to Thursday's steep gains of 3.5
percent and 3.1 percent against the dollar, respectively.
The Aussie was also boosted by fading expectations of an
already-slim chance of a rate cut at the Reserve Bank of
Australia's policy meeting next week.
Oil prices surged to a two-week high, rising above $75 a
barrel after posting their biggest two day gain since
mid-August. Forecasts of supply disruptions in the wake of an
intense Atlantic hurricane season also provided a leg-up.
Metals were steady to marginally higher with copper hitting
a two-week high on the heels of the flight to riskier assets
while the jump in oil prices was additionally helped by
speculations about supply disruptions due to the Atlantic
hurricane season.
(Additional reporting by Aiko Hayashi in TOKYO; Editing by
Kazunori Takada)
(Reporting by Umesh Desai)
