By Kevin Yao

SINGAPORE - Asian stocks rose for a fourth day on Friday on optimism that the world economic recovery was on track despite Europe's debt woes, while the euro was steady after a rally the previous day.

The MSCI index of Asia Pacific ex-Japan stocks rose about 1.6 percent, led by energy and technology plays.

Asian stocks have gained nearly 4 percent in the past four days, but are still down more than 8 percent so far this year.

There was little impact from a spate of fresh Chinese data.

The data showed China's inflation accelerated to a 19-month high in May while industrial output and fixed-asset investment growth moderated, sending mixed signals about the temperature of the world's third-largest economy.

Japan's Nikkei climbed 1.7 percent on signs of health in the euro debt market and a halt in the yen's advance against the euro.

"The euro's rebounded and there have been some supportive factors emerging from the euro zone," said Nagayuki Yamagishi, a strategist at Mitsubishi UFJ Morgan Stanley Securities.

"Also, it seems as if there had been selling pressure from a large number of options taken out on the idea that the market was in a downward trend, but this pressure went away this morning when Nikkei options settled."

Financial stocks such as Mitsubishi UFJ Financial Group rose after Japan's Banking Minister Shizuka Kamei, an advocate of financial regulation, said he would step down to protest that a controversial postal bill would not be passed in the current session of parliament.

In Europe, a bond sale by Spain saw strong demand, a positive sign amid worries about appetite for debt from struggling European nations. The euro rose more than 1 percent against the U.S. dollar to trade above $1.21 in New York trade.

"Funds have started to lean towards risk-taking after all-out risk-reduction behaviour seen in mid- to late May, and
domestic investors are following suit," said Tsuyoshi Segawa, an equity strategist at Mizuho Securities.

Hong Kong shares closed 1.2 percent higher as a rally in Asian markets boosted investor confidence and bargain-hunting drove up property and energy stocks.

Defensive industries such as utilities and telecommunications, which had outperformed the broader market
in recent weeks, lagged as some investors booked profits.

Shanghai shares closed up 0.3 percent, with large-cap shares outperforming.

The index remains one of the world's worst performers this year, losing 22 percent after China unleashed policies to tame property speculation to keep its economy from overheating.

"I think the index has bottomed out and should rebound in the near term," said Cheng Yi, analyst at Xiangcai Securities, who added that the market drew strength from foreign markets.

Chen said the May economic data, including a rise in the consumer price index, gave few clues for trading, although a leak of stronger-than-expected export data had fuelled a rally on Wednesday.

"The economic data didn't give us any surprises, leading the market to move in a small range today," she said.

The market will be closed from Monday to Wednesday for the Dragon Boat Festival holiday.

Australian shares closed up 1.6 percent, after hopes of a compromise deal on a planned mining tax buoyed resource stocks.

Prime Minister Kevin Rudd denied talk of a swift deal with miners over his controversial mining tax, as global miner BHP Billiton rejected a rumoured compromise affecting the nation's top export sector.

Shares in BHP Billiton, Fortescue Metals Group, Rio Tinto Ltd and Xstrata all rose in London and Australia on hopes for a deal.

There were signs value was returning to the domestic market after concerns about the Chinese economy, European debt and the mining tax eroded sentiment in recent weeks, investors and traders said.

"Barring any further deterioration in any of those three factors, the probability is looking for a better market going into the rest of the month as valuations come back to a level where local investors start to add funds to the market," said Matt Williams, head of Australian equities at Perpetual Investments.

Australian markets will be closed on Monday for the Queen's Birthday public holiday.

Taiwan stocks rose 1.6 percent, tracking gains on Wall Street and regional bourses, with TSMC and Cathay Financial leading the market higher on strong sales and profits for May.

U.S. stocks rallied nearly 3 percent on Thursday, a day after a late-day sell-off that had reversed strong gains in
what has been a volatile month on Wall Street.

South Korean shares advanced 1.4 percent, with tech issues such as Samsung Electronics gaining.

"Chinese export data was strong, and the moderation of growth in factory output and capital spending data eased
earlier fears about potential tightening moves," said Hong Soon-pyo, a market analyst at Daishin Securities.

Shares in India and Singapore rose more than half a percent.

The Australian and New Zealand dollars slipped across the board as traders booked profits on their rallies this week.

Gold rebounded on short covering after falling around 1 percent in the previous session, while a rise in ETF holdings to another record showed bullion still attracted buying from investors.

Oil held above US$75 during Asian trading, heading for a weekly gain of about 5 percent, as investor confidence in
China's growth buffered data showing weaker-than-expected industrial output for the country in May.

However, it slipped below US$75 during early European trading. --REUTERS