Asian stocks rose on Thursday on higher-than-expected Chinese exports and assurances from Federal Reserve Chairman Ben Bernanke that the U.S. economic recovery was on solid footing, but European stocks were expected to open lower, tracking Wall Street's fall overnight.
The euro steadied near four-year lows against the dollar but continued to look fragile, with traders awaiting a European Central Bank meeting later in the day to see if it plans any fresh steps to help debt-stricken euro zone countries.
Asian markets also drew support from positive comments by Bernanke, who told the U.S. House of Representatives Budget Committee that the U.S. economic recovery was on track even if jobs would return only slowly.
Bernanke said that while a double-dip recession can never be entirely ruled out, he expected the world's largest economy to continue growing.
The World Bank said on Wednesday a slide back into recession could not be ruled out in some countries if investors lose faith in efforts in Europe and elsewhere to tackle rising debt levels.
Global stock markets and the euro were given a boost on Wednesday when sources told Reuters that Chinese exports had grown about 50 percent in May from a year earlier, blowing past expectations and offsetting concerns that problems in Europe could derail the global recovery.
But U.S. stock markets fell in late trade as a host of negative factors overwhelmed the impact of the China data, highlighting the skittishness of investors, who have been quickly selling into any market rallies in recent weeks. <.N>
With the European debt crisis ongoing, there will still be caution over its future impact on China's exports, said Zhang Gang, an analyst at Central Securities.
European shares were expected to open sharply lower on Thursday ahead of interest rate decisions from the ECB and Bank of England later in the session.
Britain's FTSE 100 <.FTSE> was expected to open as much as 1.3 percent lower; Germany's DAX <.GDAXI> was seen down as much as 0.9 percent, and France's CAC 40 <.FCHI> was expected to fall as much as 1.3 percent.
Lingering worries about a slowdown in Europe limited further gains in Asia on Thursday, even as China's official data confirmed faster growth, with exports up 48.5 percent in May from a year earlier and imports up 48.3 percent.
Japan's Nikkei share index <.N225> closed up 1.1 percent, with the MSCI ex-Japan stock index <.MIAPJ0000PUS> up 0.7 percent. Hong Kong <.HSI> recouped early losses to rise 0.2 percent but Shanghai <.SSEC> slipped as traders took profits on Wednesday's China-fueled rally.
The Nikkei's relative strength index remained around 34, with levels of 30 and below signaling a market has been oversold.
Australian shares also rose 1.1 percent, with resources stocks leading the way on higher metals prices, which were boosted by the strong Chinese data, and on better-than-expected Australian job figures. Australia is a major supplier of iron ore and other raw materials to China.
EURO EXTENDS GAINS
The euro extended gains as short-covering picked up pace, helped by comments from a Chinese pension fund chief who said the single currency could weather the region's sovereign debt crisis.
The single currency rose as high as $1.2064 on trading platform EBS, up more than one U.S. cent from an earlier low of $1.1957. It has risen about 1.5 percent since hitting a four-year low of $1.1876 on Monday.
The ECB is expected to keep interest rates at a record low when it meets later on Thursday. Analysts are watching to see what it can do to shore up sentiment and euro zone economic growth, which is likely to suffer as heavily indebted countries slash their spending to reduce strains on their finances and give them access to emergency aid.
The Australian dollar rose half a U.S. cent after data showed the jobless rate dropping to a four-month low of 5.2 percent, when analysts had looked for an unchanged 5.4 percent.
The New Zealand dollar was up 0.1 percent at $0.6722 following a 1 percent rally made after the country's central bank hiked interest rates from a record low, its first move since the global crisis.
Oil reversed early losses as confirmation of strong Chinese overall exports in May outweighed weaker demand readings in top oil consumer the United States.
U.S. crude for July was up 14 cents at $74.52 a barrel at 0532 GMT, after trading as low as $73.72 before the export data came out.
(Editing by Kim Coghill)