(Reuters) - Asian shares and the euro inched up Friday after a flood of cheap European Central Bank funds this week eased debt worries, allowing markets to overcome some weak data and concerns over surging oil prices.

The MSCI Asia Pacific ex-Japan <.MIAPJ0000PUS> was up 0.4 percent, but off a seven-month high touched on Wednesday.

Japan's Nikkei <.N225> opened up 0.9 percent.

The ECB's half a trillion euros in cheap, 3-year loans added to the financial system this week underpinned markets, driving down yields on highly-indebted euro zone government bonds, such as Italy, on Thursday.

While the measures will ultimately prove dilutive to the euro, they will continue to spur the flight to riskier assets, said Christopher Vecchio, currency analyst at DailyFX.

The euro stood steady at $1.3323, having briefly dipped below $1.3300 overnight.

Oil steadied early on Friday after surging on news that Israel would test-fire a ballistic interceptor missile, escalating Middle East tensions already high due to tough sanctions against Iran and a report from Iranian media about an explosion in an oil pipeline in Saudi Arabia.

Brent crude jumped as much as 5 percent on Thursday to hit a high of $128.40, the loftiest since July 2008, before settling up 2.9 percent at $126.20 a barrel. U.S. crude was nearly flat at $108.88 a barrel early on Friday, after touching $110.55, its highest since May 2011, the day before.

MUTED TO MIX DATA

Markets have turned their focus to economic data, and their reaction has been muted to mixed signs about global factory activities.

U.S. manufacturing unexpectedly cooled in February and consumer spending was flat in January for a third straight month after accounting for inflation, casting doubts on the strength of the recovery.

But new U.S. claims for jobless benefits last week hovered near four-year lows and retailers and automakers enjoying brisker February sales.

Unemployment in the 17-nation euro zone hit a euro-era record 10.7 percent in January, data out on Thursday showed, and the euro zone's manufacturing sector contracted for the seventh month running in February.

But China on Thursday kept alive hopes the world's second-biggest economy can avoid a hard landing, while underscoring the formidable headwinds facing the country as exports falter.

The probability of a sharp global slowdown has eased due to recent policy measures adopted in the euro zone to tackle its debt crisis, the International Monetary Fund said on Thursday, but it warned risks to world growth remain squarely to the downside.

ANZ Bank said in a note that higher oil prices appear to be denting the emerging optimism towards global growth and are playing into concerns over inflation.

Asset markets shrugged off generally downbeat economic data from the US and Europe, apparently preferring to focus on the continued decline in US claims for unemployment compensation and successful government bond auctions in France and Spain, analysts at Barclays Capital said.

The People's Republic of China hosts the National People's Congress meeting starting on 5 March. We expect the committee to approve cautious macroeconomic policy to ensure a soft landing, with a focus on expanding consumption and stabilising and encouraging private capital investment into strategic industries, they said.

Sentiment in Asian credit markets improved, narrowing the he spreads on the iTraxx Asia ex-Japan investment-grade index by four basis points.

(Editing by Michael Perry)