By Shinichi Saoshiro
TOKYO (Reuters) - Asian stocks gained on Thursday after upbeat U.S. employment data and a halt to a slide in oil tempered investor risk aversion, while the euro held near a nine-year low.
Hopes that the European Central Bank will embark upon bolder stimulus after data showing the euro zone had slipped into deflation also shored up risk assets, hit this week by concerns over tumbling oil prices and global economic weakness.
Tokyo's Nikkei outperformed its regional peers and gained 1.7 percent.
"Sentiment is supported by such overseas developments and investor concerns are eased for now," said Toshihiko Matsuno, chief strategist at SMBC Friend Securities in Tokyo.
But in testimony to the sharp decline suffered earlier on wide flight from risk, the Nikkei was still down 1.6 percent this week.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 1 percent. South Korea's KOSPI climbed 1.3 percent and Australian shares tacked on 0.7 percent.
Wall Street rebounded on Wednesday from five straight sessions of losses after strong U.S. private sector jobs data underscored strength in the world's largest economy and fanned hopes for a strong reading of the all-important non-farm payrolls due on Friday.
Optimism over more ECB stimulus may have helped equities but the prospect of further central bank easing was detrimental for the euro, which slid to a nine-year low against the dollar.
The common currency fetched $1.1819, within close proximity of $1.1802 hit overnight, its lowest since January 2006.
"At this stage there is very little reason to doubt that euro will test its 2005 low of $1.1639...there is only 15 days to go before the ECB meeting and we expect the currency to remain under pressure until then," Kathy Lien, managing director for BK Asset Management wrote in a note to clients.
Data released on Wednesday showing euro zone inflation turning negative for the first time since 2009 cemented already high expectations that the ECB will embark on a bond buying programme at its Jan. 22 meeting.
In contrast, the Federal Reserve is still expected to lift interest rates, although the timing remains unclear. Minutes of the December meeting released on Wednesday offered no new clues on when the Fed will move.
The dollar was better bid against the yen after the rebound in stocks dampened appetite for the safe-haven Japanese currency.
The dollar gained 0.4 percent to 119.695 yen after pulling away from a three-week low of 118.05 hit on Tuesday.
A halt to the recent sharp decline in U.S. Treasury yields also boded well for the dollar.
The 10-year U.S. Treasury yield was at 1.992 percent after dropping to a 12-week low of 1.887 percent on Tuesday.
U.S. crude oil clung to gains after snapping a four-day tumbling streak overnight that took prices to a 5-1/2-year low earlier in the week.
Aided by an unexpected drop in U.S. crude inventories for last week, U.S. crude was up 57 cents at $49.22 a barrel. [O/R]
(Additional reporting by Ayai Tomisawa in Tokyo; Editing by Jacqueline Wong)
