Asian shares edge up, yen at 3-mth low

SINGAPORE, May 17 (Reuters) Asian shares firmed on Thursday, but Tokyo held steady following weaker-than-expected growth data that underlined expectations the Bank of Japan was in no hurry to raise interest rates.

A record close on Wall Street bolstered share markets, pushing Singapore, Seoul and Sydney to record peaks.

The dollar rose to a three-month high against the yen, bolstered by upbeat U.S. industrial output data and sparking buying of Asian exporter shares.

Britain's FTSE 100 index is seen opening up 20-22 points, financial bookmakers said, with eyes on merger and acquisition activity.

Gold rebounded, but held near its lowest level in six weeks hit overnight on the firmer dollar.

Shanghai copper fell by its daily 4 percent limit for the second time this week, after the red metal struck its lowest level in six weeks in London on fears Chinese demand may slow after record first-quarter imports.

Tokyo's Nikkei ended down 0.17 percent and the TOPIX index shed 0.27 percent, erasing early gains, after the BOJ on Thursday left its interest rates unchanged at 0.5 percent, the lowest among the top industrialised nations.

Investors are waiting for comments from BOJ Governor Toshihiko Fukui in a news conference for further clues about the state of the economy.

Earlier, data showed gross domestic product grew at an annualised rate of 2.4 percent in January-March, just below forecasts for 2.7 percent and slowing from a strong fourth quarter.

''The data was not negative to the market, as it showed the economy is staying solid,'' said Yutaka Shiraki, senior equity strategist at Mitsubishi UFJ Securities. ''But the figures were not strong enough to draw active buying from investors.'' Sony Corp. offered support, gaining 2.6 percent after the electronics giant forecast a jump in annual profit on strong sales of LCD TVs and expectations that game-unit losses will shrink.

But firms with weak earnings were battered such as Meiji Dairies, which sank 4.5 percent.

Chinese stocks rose 1.4 percent to recover further from Tuesday's sharp drop. A fund manager said China's stock market is overheated, but some blue-chips, such as financials, were worth holding.

''Generally speaking, we are getting less aggressive about stocks now. But we are shifting more attention to blue chips,'' said Li Sheng, chief equity investment officer of Galaxy Asset Management Co.

Hong Kong's Hang Seng rose 0.4 percent, led by China Netcom, which jumped 4 percent after Goldman Sachs upgraded the fixed-line operator.

South Korean shipbuilders such as Hyundai Heavy Industries soared 6.5 percent, driving the KOSPI up almost 1 percent to a record close. But investors were edgy after the Korean won rose to its highest in nine and a half years versus the yen.

Singapore shares raced to record peaks, led by Oversea-Chinese Banking Corp..

Australian shares gained more than 1 percent, for a record closing high. But Qantas Airways lost up to 2 percent after a consortium that made a failed US billion bid for the airline said it would not launch a fresh offer.

MSCI's measure of Asia Pacific stocks excluding Japan gained 0.7 percent, just off a record high on Monday.

WEAK YEN The Dow Jones average rose 0.7 percent to its 23rd record close this year, as disclosure of a major investor's stake in Citigroup and a buyout deal for Bausch&Lomb sparked speculation of more takeovers. The tech-laden Nasdaq gained 0.88 percent.

The dollar moved up to 120.85 yen and struck 120.88 yen, the highest since late February and up from near 120.70 yen before Japan's economic data.

The euro rose to 163.49 yen from near 163.25 yen, in sight of the single currency's all-time peak of 163.80 yen.

''The main (Japan) scenario remains for a rate rise in August or September, but it wouldn't be surprising if such expectations cool a little in light of the data,'' said Takafumi Yamawaki, fixed income strategist at Morgan Stanley.

But Chief Cabinet Secretary Yasuhisa Shiozaki said the end of Japan's deflation is in sight as prices are no longer falling persistently, and that economic recovery was intact despite some weakness in industrial output.

''There are some risk factors such as overseas economies, so we will continue taking steps and the government and the BOJ will work together to make sure that the economy will not fall back into deflation,'' Shiozaki said.

Oil rose after falling overnight on a strong build in crude and fuel stocks in the United States, but worries over gasoline emerged after the latest batch of U.S. refinery snags.

The new front-month Brent July crude rose 28 cents to .25 a barrel, while U.S. June crude gained 11 cents to .66.

Spot gold rose to 3.70/664.30 an ounce from 1.60/663.10 late in New York.

REUTERS PV DS1409