Asian shares eked out small gains and the euro inched higher on Thursday, reflecting lingering worry over sovereign funding for troubled euro zone economies Spain and Italy.

With a lack of strong follow-through buying in Asia from gains in global stocks on Wednesday and investors wary ahead of an Italian bond sale later in the session, European equity markets were likely to start mixed.

Financial spreadbetters predicted major European markets <.FTSE> <.FCHI> <.GDAXI> would open between 0.2 percent lower and 0.2 percent higher. U.S. stock futures were up 0.3 percent. <.EU> <.L> <.N>

MSCI's broadest index of Asia Pacific shares outside Japan <.MIAPJ0000PUS> edged up 0.3 percent, having earlier hovered near a 10-week low hit on Wednesday, as strong Australian employment data helped improve sentiment. Australian equities <.AXJO> were among the outperformers with a 0.6 percent gain.

The Australian dollar jumped 0.5 percent to the day's high near $1.0370 after Australian employment far outpaced expectations by surging 44,000 in March while the unemployment rate stayed at 5.2 percent, suggesting the economy was faring better than many had feared.

Japan's Nikkei average <.N225> added 0.2 percent, off its lowest in nearly two months touched the day before. <.T>

The Nikkei is up on a technical rebound after prices fell to bargain levels, but until investors start focusing on earnings from last fiscal year, European debt worries will continue to weigh and dictate market direction, said Tetsuro Ii, the president of Commons Asset Management in Tokyo.

South Korean shares <.KS11> were Asia's sole laggard, falling 1 percent, with investors taking profits on blue-chips after a lengthy rally, pushing the market to a fresh one-month intraday low.

Along with recent data from the United States and China suggesting a slowdown in economic recovery, resurfacing worries about Spain's fiscal woes as well as Italy persisted despite a better-than-expected sovereign debt auction by Italy and supportive comments from a European Central Bank official on Spain.

SAFE HAVEN STABILISES

An encouraging start to the earnings season helped U.S. stocks snap a five-day losing streak, spurring investors to scale back safe haven buying of gold and U.S. and German government debt on Wednesday, but further selling of these perceived safe assets weakened in Asia on Thursday.

Ten-year Treasury yields inched down 1 basis point while gold was steady at $1,658 an ounce.

The prospect in the euro zone still looks grim with yields in Spain and Italy trading at relatively high levels, said Peter Tse, director at ScotiaMocatta in Hong Kong.

Tse said even if another risk sell-off took place on the deteriorating euro zone situation, gold should be able to weather the storm much better than other commodities due to its safe-haven status.

Asian credit markets steadied, with the spread on the iTraxx Asia ex-Japan investment-grade index barely changed from Wednesday.

ITALY AUCTION EYED

Investors will use a 5 billion euro bond sale by Italy later on Thursday to gauge market risk tolerance.

Yields on Spanish and Italian sovereign debt are still well below the highs of 2012 when they breached the critical levels, while dollar funding rates in Europe have remained stable.

The euro crept higher against the dollar, reaching a one-week high of $1.3158 before retreating to $1.3130, leaving the currency within the $1.3030-$1.3165 range seen in the past week.

The relief could be felt more globally, but it was limited in scope indicating that we remain in a roller coaster and are not at the end of it yet, said Sebastien Galy, strategist at Societe General.

The Federal Reserve on Wednesday provided an reassuring assessment of the U.S. economy in its latest Beige Book summary of national activity, after Friday's data showing a sharp slowdown in U.S. jobs creation in March triggered a sell-off in global markets earlier this week.

U.S. economic activity kept growing moderately in the late winter months, but rising energy prices were beginning to worry manufacturers and retailers across the country, the Fed said.

Oil moved sideways on Thursday, with Brent futures nearly flat at $120 a barrel and U.S. oil futures up 0.1 percent at $102.75.

(Additional reporting by Ian Chua in Sydney and Rujun Shen in Singapore; Editing by Jacqueline Wong)