* Stocks bounce on hopes of strong corporate profits
* Euro edges up on short covering ahead of weekend
* Safe-haven yen gains as sterling struggles
By Koh Gui Qing
SYDNEY, Feb 26 (Reuters) - Asian stocks rose on Friday as
investors tried to shake off weak economic data in the United
States and Europe, but lingering caution about riskier assets
supported the safe-haven yen.
European shares <> were expected to bounce by as much
as 1.3 percent after steep losses on Thursday, with stronger
commodity prices expected to help mining and energy stocks.
The euro <EUR=>, under heavy pressure from Greece's fiscal
crisis, edged higher as some traders covered short positions
heading into the weekend.
Analysts said hopes of strong corporate profits, especially
in fast-growing Asia, won out over global growth and sovereign
credit concerns on Friday to push stocks higher.
Investors were keenly awaiting a raft of U.S. data later in
the day including existing home sales and a second estimate of
fourth-quarter GDP, and a second reading on UK fourth-quarter
GDP. <ECONG7>
"Share markets are caught in a tug of war between worries
about stimulus withdrawal, sovereign debt and the
sustainability of the global recovery on the one hand, and low
interest rates and rising profits on the other," said AMP
Capital Investors head of investment strategy Shane Oliver.
The MSCI index of Asian shares excluding Japan
<.MIAPJ0000PUS> rose 1 percent despite overnight weakness on
Wall Street, while Japan's Nikkei <> edged up 0.2 percent,
with investors soothed by data showing Japanese factory output
rising 2.5 percent in January to meet demand from the rest of
Asia.
The shine from the manufacturing report eclipsed Japanese
inflation data that showed the world's No. 2 economy was still
mired in deflation. That fuelled talk that Japan may need more
quantitative easing. []
In India, the BSE Index <> climbed 2.4 percent,
helped by gains in bank stocks after the federal budget
proposed to provide 165 billion rupees ($3.6 billion) for
recapitalisation of government-controlled banks. []
Yet, price performances so far this year suggest safer
assets are still in vogue.
The Nikkei has lost nearly 4 percent since the start of the
year, and the Asian MSCI stock index is down 5.7 percent. In
contrast, the yen has gained 3.9 percent.
The mood soured further on Thursday after U.S. data showed
jobless claims rising. Orders for durable goods also
unexpectedly fell, casting doubt about the pace of recovery in
the world's biggest economy. []
Markets have also been hamstrung by worries that the Greek
debt crisis may worsen if Athens suffers credit rating
downgrades [].
Concerns about fiscal strains in the euro zone's weaker
states have pushed the euro to near one-year lows and there
were also few signs that selling pressure would ease any time
soon.
A Wall Street Journal report said on Thursday some major
hedge funds are making substantial bets against the euro as
Greece's debt crisis rages. []
The euro rose 0.5 percent against the yen from late U.S.
trade on Thursday to 121.32 yen <EURJPY=R>, having bounced off
a one-year trough of 119.66 yen hit on trading platform EBS on
Thursday. But traders said the gains in the euro were largely
due to short-covering ahead of the weekend.
Sterling <GBP=D4> was also on the defensive at $1.5280
after hitting a nine-month low on Thursday, hurt by concerns
the UK economy is so weak that it might need more quantitative
easing from the central bank.
"Sterling really suffered," Barclays said in a note to
clients. "The euro perhaps performed better than expected given
the ongoing gloom over Greece and some very weak numbers."
Barclays said the selling could persist if Britain's second
release GDP report on Friday disappoints. Markets forecast the
British economy grew just 0.2 percent in the fourth quarter
from the previous quarter.
The U.S. dollar stayed under pressure on Friday, with the
dollar index <.DXY> dipping 0.2 percent to 80.623.
Commodities benefitted from a weaker dollar, but gains were
modest.
Oil <CLc1> rose 0.5 percent and gold <XAU=> ticked higher,
in part on a report that China would buy IMF gold. But the
author of the report later said she did not have official
sources for her story. []
Underscoring the cautious tone, the yen held on to the bulk
of its gains to trade at 121.32 yen <EURJPY=R>, near a one-year
peak of 119.66 yen hit on Thursday. U.S. Treasury debt prices
also held on to the previous day's steep gains. []
(Additional reporting by Victoria Thieberger in MELBOURNE)
(Editing by Kim Coghill)
