Asian shares rose to 14-month highs on Thursday after upbeat U.S. retail sales and earnings reports prompted a shift to riskier assets, pushing the U.S. dollar to a 14-month low and prompting Asian governments to step in to curb currency strength.

European stocks <.FTEU3> were up 0.4 percent shortly after opening, while the euro earlier hit an 14-month high of $1.4961, as the U.S. dollar slid to fresh 14-month lows against a basket of currencies <.DXY> amid rising risk appetite.

U.S. equity futures were flat.

Shares in Japan jumped nearly 2 percent, helped by gains in tech shares and other exporters who might benefit from rising U.S. demand.

Stocks in the rest of Asia firmed to their highest levels since last August.

Positive retail sales and earnings data from the United States -- including from Intel Corp and JP Morgan Chase & Co -- which had pushed the Dow Jones <.DJIA> above 10,000 points on Wednesday for the first time in a year -- set the scene for the Asian rally.

Growing confidence that the United States can fuel a global economic recovery encouraged investors to buy higher-yielding currencies, including the Australian and New Zealand dollars, which were additionally boosted by rising expectations for interest rate hikes.

Authorities in Taiwan, Korea and the Philippines were spotted buying U.S. dollars to curb strength in their currencies. Several Asia countries have intervened in recent weeks to cap their currencies and keep them competitive in export markets.

The Aussie dollar hit a 14-month high at $0.9224 to the U.S. dollar after the Reserve Bank of Australia pointed to more rate rises. Last week, it became the first central bank in the Group of 20 to tighten policy as the global financial crisis eases.

We have said that, over time, interest rates will need to be adjusted toward a more normal setting as the economy recovers, RBA Governor Glenn Stevens said in a speech.

In New Zealand, data showing stronger-than-expected inflation raised the likelihood of a rise in interest rates in coming months and sent the Kiwi to a 15-month high of $0.7489.

The flow of cash into riskier assets has knocked the U.S. dollar, a trend that pushed the currency to a 14-month low of 75.237 against a basket of currencies <.DXY>.

The MSCI index of Asia Pacific stocks traded outside Japan <.MIAPJ0000PUS> rose 1 percent to 413.34, its highest level since August last year. The Thomson Reuters index of regional shares <.TRXFLDAXPU> was up 0.3 percent.


Thailand missed out on the Asian share rally as its benchmark index <.SETI> skidded more than 5 percent in a second day of heavy foreign selling on concern over the king of Thailand's health, despite official comments that he was improving.

Still, Thai stocks have rallied more than 50 percent this year.

ING Group, which has US$500 billion in assets under management globally, said it was overweight Thailand, Singapore, India and Indonesia in Asia.

In a survey by ING Investment Management, released on Thursday, 83 percent of Asian investors said they expected the region's stock markets to stay at current levels or rise in the fourth quarter.

Looking at PE, valuations in Asia are now a bit higher than their five-year average, said Nicholas Toovey, regional head of equity at ING Investment Management. But in this part of the economic recovery, when we expect higher than usual earnings (growth), we'd recommend either holding or buying stocks at these levels.

Expectations of healthy global growth prodded NYMEX crude futures to a one-year high near $76 a barrel after U.S. industry data showed a surprise drop in inventories.

Gold held above $1,060 an ounce, just below Wednesday's record high above $1,070.

Tokyo's Nikkei average <.N225> rose 1.8 percent to 10,238.65 helped by auto maker Honda Motor Co <7267.T>, which gained 1.8 percent and Sony Corp <6758.T>, which leapt 3.6 percent.

Shares in Hong Kong <.HSI> were up 0.9 percent and those in Shanghai <.SSEC> increased 0.5 percent.

China doused speculation that the country's accelerating economic rebound would revive strong upward pressure on the yuan, saying one-way bets on China's currency were diminishing.

(Additional reporting by Anirban Nag in SYDNEY; Editing by David Fox)