Asian stocks jumped Friday and the euro steadied, after rising sharply the previous day, as investors hoped for a big policy move from European finance ministers to combat the debt crisis.

Coordinated central bank action around the world to boost liquidity for European banks, at a time when some institutions have been shut out of short-term lending markets, has raised speculation that policymakers may take bold steps to hold the euro zone together.

Equity markets in Asia rallied,, taking heart from the S&P 500 .SPX closing above the 1,200 level, which had proved to be a stiff resistance over the past two weeks.

Japan's Nikkei was up 1.8 percent, climbing above a steep trendline formed off intra-day highs in August and September.

With today's rise, it is like we are cautiously climbing up a wall, but at the same time we're thinking that the wall may collapse if we go up any further, said Kenichi Hirano, a strategist at Tachibana Securities.

Profit-taking ahead of a long weekend in Japan could see some of the gains fade in the afternoon session.

The benchmark MSCI index of Asia Pacific stocks outside Japan rose 2.3 percent, with gains mostly spread between technology and commodity-related shares.

The index has rebounded more than 4 percent from a 14-month low hit on Wednesday.

While stocks across Asia rallied, volumes remained light and were significantly below levels seen during the selloffs over the past six weeks.

It certainly doesn't feel like a rally, but then again, that's what melt-ups are all about, said Todd Martin, Asia equity strategist at Societe Generale in Hong Kong, in a note to clients.

In Hong Kong, shares of European retailer Esprit Holdings (0330.HK) fell more than 32 percent - the worst two-day drop since October 1997 - after disappointing first-half results on Thursday.

ASIA FX

Weakness in Asian currencies as foreign investors offloaded on regional bets and thin equity volumes, however, suggest investors remain skeptical that the debt crisis can be solved by providing temporary emergency funds for banks.

Obviously it's not a long-term solution, we need to see some resolution to the sovereign debt issue to give market confidence we'll have stronger growth over the medium-term, said Spiros Papadopoulos, a senior market economist at National Australia Bank.

Certainly these policy measures will help improve confidence in the short-term, he added.

This week has seen hedge funds of all stripes and mutual funds selling Asian currencies at a rapid pace, and the move continued on Friday in spite of the stable euro.

The euro slipped 0.2 percent to $1.3850 though it was actually up 2.1 percent on the week, with the swift move up through $1.3750 making traders nervous about opening bets against the currency ahead of the ECOFIN meeting and with the next Federal Reserve meeting on Sept. 20-21.

The weakness in Asian currencies has spilled over to the Australian dollar because of the antipodean currency's use as a play on investor risk-taking.

The Australian dollar was down 0.1 percent to $1.0321 and has fallen a percent this week.

Spot gold prices slid 1 percent to $1,772.75 an ounce, on course for the biggest weekly decline since January 2009.

The combination of resilient equities, a rebound in the euro and a bearish double-top chart pattern in gold have combined to cast a shadow on the safe-haven asset.

(Reporting by Kevin Plumberg in Singapore, Vikram Subhedar in Hong Kong, Ayai Tomisawa in Tokyo and Cecile Lefort in Sydney; Editing by Kavita Chandran)