(Reuters) - Tokyo stocks jumped to a seven-month high Friday as Asian shares rose on signs Greece is a step nearer to averting a default, although momentum may be checked by caution ahead of U.S. data that is expected to confirm a labor market recovery.
Preliminary results of Greece's bond swap with private creditors are expected at 0600 GMT. Ahead of that, officials said there had been a strong take-up of the offer, which would open the way for Athens to secure funding needed to avoid a default.
The MSCI Asia Pacific ex-Japan index rose 0.4 percent, while Japan's Nikkei average added as much as 1.7 percent, after global stocks had posted their best day in more than two months on Thursday.
News about Greece is generally positive and is expected to underpin the euro in the near-term, while expectations the European Central Bank won't lower interest rates also will spur a buy-back in the euro, said Yuji Saito, director of the foreign exchange division at Credit Agricole Bank in Tokyo.
But we need to see the announcement and more details before we are convinced. Even when a messy default is prevented, the upcoming election in Greece next month will be the next risk factor, he said.
The euro was at $1.3263, not far from an overnight high of $1.3291. Commodity currencies such as the Australian dollar held steady around $1.0640 on confidence the Greek bond swap would go through, although a surprise drop in Australia's trade deficit in January briefly weighed on the currency.
Market reaction was muted to data showing China's annual inflation cooled surprisingly sharply to a 20-month low of 3.2 perent in February, well below its 2012 target of 4 percent, giving Beijing room to ease policy if needed.
The latest CPI number is mainly because of the dissipation of the Chinese New Year effect. Prices came down after the holiday, especially food prices, said Kevin Lai, economist at Daiwa in Hong Kong. We think that inflation is not a risk anymore.
The ECB kept interest rates unchanged as expected on Thursday and lowered its euro zone growth forecast, but noted that with rises in energy prices, inflation is now likely to stay above 2 percent in 2012, with upside risks prevailing.
U.S. JOBS DATA
Expectations of a solid U.S. payrolls report for February sparked appetite for growth-linked assets, with investors hoping for confirmation that the labor market's recovery has moved up a gear and will underpin future growth.
Friday's U.S. data is expected to show a rise of 210,000 in nonfarm payrolls, with a gain in the private sector of 225,000 jobs offsetting a modest decline in government jobs.
Preliminary results on the Greek debt offer are expected to be announced officially at 0600 GMT on Friday and Finance Minister Evangelos Venizelos will hold a news conference before a call with euro zone finance ministers in the afternoon.
Greece will top an acceptance rate of 95 percent in a bond swap plan only after collective action clauses that enforce losses on any holdouts are imposed, a government official said.
Another Greek government official had earlier said the participation rate was nearing 95 percent before the 2000 GMT deadline expired. A third official said participation had topped 85 percent on debt regulated under Greek law.
A disorderly default by Greece would have triggered much more far-reaching financial damage than the losses its bond holders suffer. A messy default would risk reigniting concerns about financing in other similarly debt-burdened euro zone countries and undermine the euro.
Hopes for Greece and expectations for solid U.S. economic underpinned prices of copper and oil on Friday.
Brent crude inched up 0.1 percent to $125.62 a barrel, after settling up 1.1 percent, while U.S. crude added 0.2 percent early on Friday to $106.82 a barrel after settling up 0.4 percent on Thursday.
Copper rose for a third day, rising 0.6 percent to $8,377 a tonne.
Sentiment in Asian credit markets also improved, narrowing the spread on the iTraxx Asia ex-Japan investment-grade index by about 5 basis points.
(Editing by Richard Pullin)