(Corrects paragraph 4 to say inventory adjustments, rather than inventory building and drops reference to rates)
* Shares in Japan, Korea rise; Australia, Shanghai down
* Dollar hits 14-month low vs euro on China reserves article
* Gold holds below $1,060, oil slips below $80 a barrel
* Hong Kong, New Zealand markets closed for holiday
By Charlotte Cooper
TOKYO, Oct 26 (Reuters) - Shares in Japan and South Korea rose on Monday, with Seoul lifted by strong economic growth data, while the dollar slid after a Chinese article said Beijing should raise its euro and yen holdings in its reserves.
Shares in Europe were set to open flat. Financial spreadbetters expect Britain's FTSE 100, Germany's DAX and France's CAC to open a few points higher.
The MSCI index of Asia-Pacific shares excluding Japan was steady, holding below a near-15-month peak set last week, while S&P futures were flat, pointing to a stable start on Wall Street later.
South Korea's economy grew 2.9 percent in the July-September quarter, its fastest clip since early 2002, but much of the growth came from inventory adjustments.
The Korea Composite Stock Price Index closed up 1.03 percent, lifted by foreign buying, with retailers such as Shinsegae Co Ltd gaining on hopes for improving consumption.
Korean pharmaceutical firm Green Cross also helped, rising 14 percent. The United States declared 2009 H1N1 flu a national emergency and the Food and Drug Administration granted emergency use authorisation for an experimental new drug for which Green Cross has the sole domestic licence to manufacture and distribute.
In Australia, the main index ended 0.6 percent lower as banks slipped ahead of earnings this week, while Shanghai's main index fell 0.3 percent, with travel-related stocks down on the U.S. flu declaration and health-related shares up.
Hong Kong and New Zealand markets were shut for a holiday.
Japan's Nikkei average ended up 0.77 percent at 10,362.62, its highest close in four weeks, although it is still well below its 2009 peak. Traders said it was supported on the charts by its 75-day and 25-day moving averages at 10,250.
Exporters such as Honda Motor Co got some relief from the yen's recent retreat from strong levels, while machinery maker Kawasaki Heavy rose on a report of a high-speed rail project in China.
"The market is optimistic about Japanese earnings as the reporting season heads into full swing," said Kenichi Hirano, operating officer at Tachibana Securities.
Japan Airlines, which is seeking aid from banks and the government, gained 2.63 percent after a report that a state-backed body would oversee its turnaround.
DOLLAR TRIPS BUT LOSSES SMALL
On Friday, U.S. shares fell as weak results from industrial companies overshadowed stronger ones from tech and retail firms.
The Dow Jones industrial average closed down 1.08 percent, the Standard & Poor's 500 Index fell 1.22 percent and the Nasdaq Composite dropped 0.5 percent.
The dollar hit a 14-month low against the euro after an opinion piece in the Financial News, a paper published by the People's Bank of China, said the dollar should remain the principal currency in China's foreign exchange reserves but the share of euros and yen should increase.
Markets are watching to see how concerned policy makers are globally about the dollar's recent weakness. European Central Bank Governing Council member Christian Noyer, speaking in Singapore, made no comment on the euro against the dollar, which speculators took as an excuse to push the single currency higher.
The euro rose as far as $1.5064 while the dollar slipped 0.1 percent to 91.94 yen.
"The comments from China are pretty strong and that is supporting the euro," said Tony Bieber, forex analyst at Suncorp.
The dollar index, a gauge of its performance against six other major currencies, fell 0.1 percent to 75.365 and back towards a 14-month low of 74.940 touched last week.
The Australian dollar hovered below a recent 14-month peak, after producer prices data showed only a modest rise, taking pressure off the central bank for an aggressive rate rise in November to follow an increase in October.
Copper prices rose, with London and Shanghai both around 13-month highs, supported by Chinese import data and the softer dollar.
Oil fell for the third day and U.S. crude futures slipped below $80 a barrel to $79.90 as investors took profits on cautiousness about the fragility of the global economic recovery.
Gold held below $1,060. The metal was undermined by weak physical demand, keeping prices below this month's record highs above $1,070 per ounce.
U.S. Treasury prices dipped as investors braced for a record wave of issuance this week, with the December 10-year future falling 6/32 to 117-13/32. (Additional reporting by Jungyoun Park in Seoul, Satomi Noguchi and Aiko Hayashi in Tokyo and Claire Zhang and Edmund Klamann in Shanghai; Editing by Neil Fullick)