Asian shares gave back most of their earlier gains on Thursday after data showed China's factory activity shrank for a fifth successive month, renewing concerns about a growth slowdown in the world's second largest economy.

European investors will likely take the cue from their Asian peers, with financial spreadbetters predicting major European markets <.FTSE> <.FCHI> <.GDAXI> to open down 0.3 percent. U.S. stock futures were down 0.1 percent. <.EU> <.L> <.N>

The Chinese PMI data (unofficial) will no doubt dominate early sentiment, at least until European manufacturing PMI data takes centre stage, said Cameron Peacock, market analyst at IG Markets, in a note.

The MSCI Asia Pacific ex-Japan index <.MIAPJ0000PUS> was up 0.1 percent after falling back from a 0.6 percent gain prior to the Chinese data release. Still, the index has recovered about a third of the plunge from this year's peak hit on February 29 to be up about 12 percent year to date.

Japan's Nikkei average <.N225> was little changed, moving in and out of positive territory. <.T>

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China HSBC Flash PMI: http://link.reuters.com/wec37s

Japan trade balance: http://link.reuters.com/vyq65s

U.S. existing home sales: http://link.reuters.com/rab37s

Italy vs Spain debt, others: http://link.reuters.com/nyf25s

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The HSBC flash PMI, the earliest indicator of China's industrial activity, fell to 48.1 in March from February's four-month high of 49.6, with new orders sinking to a four-month low.

It raises the prospect for a further monetary policy easing to help underpin growth, although lingering inflation risks put Beijing's policymakers in a dilemma.

The Australian dollar hit a two-month low near $1.038, as the data heightened concerns of slowing commodities demand from Australia's single biggest export market.

(The PMI) suggests weak industrial output though May or even June. This may mean that GDP growth will slow noticeably in Q1 and remain soft in Q2, said Dariusz Kowalczyk, senior economist and strategist, Asia ex-Japan, at Credit Agricole CIB, adding that China remained on course to achieve a soft landing this year with 8 percent GDP growth.

Hong Kong <.HSI> and Shanghai stocks <.SSEC> slipped, but Australian shares held up 0.5 percent.

QUARTER-END FLOWS

Earlier, Japan had published slightly better data, which showed the country logged a trade surplus of 32.9 billion yen ($393 million)in February -- the first surplus in five months -- against a forecast for a 120 billion yen deficit, lifting the yen against the dollar to an intraday low near 83.14 yen from 83.44 yen before the data was released.

Aside from Japan's trade data and China's PMI, markets will likely continue to consolidate and are more likely to be affected by quarter-end supply and demand flows than headline news, said Yuji Saito, director of the foreign exchange division at Credit Agricole Bank in Tokyo.

Given a lack of major data from big economies such as China and the United States in the pipeline for the rest of the first quarter, investors took Thursday's data as a cue to adjust positions, some said.

China's data is not great but it is not a disaster, and funds probably took the opportunity to lock in profits, given few data left before the end of March that they could use to do so, said Naohiro Niimura, a partner at research and consulting firm Market Risk Advisory Co.

There is still risk for the European situation to take the turn for the worse, so funds may well have judged to sell what they can profit from now before markets start falling.

EUROPE WORRY RESURFACES

Investors were yet again reminded of the long road ahead in resolving the euro zone's debt crisis.

Portugal's core public deficit nearly tripled in the first two months of 2012, as a deepening economic slump dented tax collection, stoking concerns the country may miss its budget targets and follow Greece in needing more funds.

Italian and Spanish debt yields rose on Wednesday on concerns about Spain's slow progress in boosting its finances, while Italy faced stiff opposition to its severe austerity steps, with the country's largest trade union calling a general strike over labour reforms.

The euro inched up 0.1 percent to $1.3233, below a two-week high of $1.3286 reached on Wednesday.

Investors will now look to manufacturing data in Europe to be released on Thursday, with flash PMI estimates from across the euro zone forecast to show an overall improvement versus February, according to a Reuters poll.

Brent oil fell 0.4 percent to $123.69 a barrel while U.S. crude futures eased 0.7 percent to $106.52 a barrel. Copper was hit by concerns about weak demand from China, falling 0.9 percent to $8,381 a tonne.

($1 = 83.6300 Japanese yen)

(Editing by Alex Richardson)