* Positive U.S. economic readings helping equity momentum
* Bond yields move against yen, favour U.S. dollar
* S&P 500's 200-day moving average in plain sight
* China trade data bolsters commodity currencies
By Kevin Plumberg
HONG KONG, Sept 10 (Reuters) - Asian stocks rose to a four-month high on Friday, some investors inspired by positive U.S. economic data to pick out bargains, with the cautious shift toward risk reining in yen strength.
Leading European stocks fell 0.4 percent in early trade <.FTEU3>.
The yen's yield disadvantage has also been growing this week, following upside surprises in U.S. and Australian economic figures, handing dealers an incentive to join any selloffs of the currency. For a yen PDF, click: http://r.reuters.com/mam52p
"At the end of the day, traders are still focusing on economic developments in the U.S. and debt issues in Europe," said CMC Markets analyst David Taylor in Sydney.
"The key theme is that it is less likely the U.S. will have a double-dip recession."
Overnight, U.S. initial jobless claims fell to a two-month low. China on Friday posted stronger-than-expected import growth in August, indicating a possible rebound in domestic demand, and a 34.4 percent rise in exports year-on-year.
The Chinese data also supported currencies of major
commodity exporters such as Australia, keeping the Aussie
dollar
Still, risk taking has not become overwhelming by any stretch. Economists keep ratcheting down U.S. economic forecasts, corporate executives sound cautious and some of Europe's banks may need more capital soon.
Tokyo's Nikkei share average closed 1.6 percent <.N225> higher, with Fast Retailing <9983.T> and Canon Inc <7751.T> the biggest lifts to the index. The Nikkei is on its way to its biggest weekly increase since the week of July 11.
The MSCI index of Asia Pacific stocks outside Japan edged up 0.1 percent <.MIAPJ0000PUS> after earlier hitting the highest since May 4, with the technology sector leading gains.
The index is up nearly 11 percent in the quarter, on track for the largest gain since the third quarter of 2009.
The U.S. S&P 500 index overnight <.SPX> rose 0.5 percent and broke above its 100-day moving average, a medium-term obstacle, revealing its 200-day moving average only 1 percent away as the next significant barrier.
SPREADS DISFAVOUR YEN
The yen suffered from traders closing out of short-term bets on the currency and hastening its decline.
The U.S. dollar rose 0.5 percent to 84.23 yen, pulling further from a 15-year low around 83.32 yen hit on Wednesday.
The U.S. dollar index, which measures its trade-weighted value compared with six other major currencies, rose 0.2 percent <.DXY>, climbing above its 55-day moving average, a technical obstacle the index has struggled with in the last three weeks.
Investors betting on the yen have grown concerned about the moves in bond spreads that have gone against the Japanese currency. Overnight a lower-than-expected reading of U.S. initial jobless claims pushed up Treasury yields.
Last month economists on average slashed their 2011 U.S. economic growth forecasts by three tenths of a percent, the biggest single-month downward revision to year ahead predictions in two years, Thomson Reuters Datastream showed.
That has made investors lean heavily in the direction of negative economic news, so that a positive surprise causes them to scramble to cover their bets.
The spread of U.S. 10-year Treasury yields over Japan has widened 6 basis points this week, the biggest weekly gain since July 2010. Australian 2-year yields have shot up 22 basis points above same maturity Japanese yields this week, the largest increase since March 2010.
"Of course this could prove to be a false break (particularly given doubts surrounding the fall in initial jobless claims) but we would note U.S. yields appear to have been basing for a number of weeks now," Jonathan Cavenagh, strategist with Westpac in Sydney, said in a note.
"Hence if the yield spread continues to move in favour of the USD then USD/JPY is a good buy at current levels."
U.S. crude oil futures