* Asian shares edge higher after more upbeat U.S. earnings
* Resurgent British pound keeps up pressure on the yen
* Oil rallies to a year high above $78 as US inventoris fall
By Susan Fenton
HONG KONG, Oct 16 (Reuters) - Asian shares edged higher on Friday with Japanese exporters gaining ground as a resurgent British pound put pressure on the yen, while oil hit a one-year high above $78 on news of a slump in U.S. oil inventories.
The yen which lost more than 1 percent in New York trade, continued to suffer from a rebound in sterling as a short-covering squeeze on Britain's currency spilled into cross/yen pairs.
The squeeze was triggered by comments from Bank of England policy maker Paul Fisher that he felt more confident the bank's quantitative easing programme was working well. The pound jumped to as high as 148.62 yen, a three-week high, after rallying 3 percent on Thursday.
Shares in Japan were up 0.2 percent as the yen's weakness boosted exporters including Sony Corp, which rose 1.5 percent.
The MSCI index of Asia Pacific stocks traded outside Japan and the Thomson Reuters index of regional shares were both up 0.2 percent.
Upbeat U.S. earnings reports, which continued to point to a recovering economy, underpinned investor sentiment in Asia.
While U.S. investors were disappointed that results from financial giants Goldman Sachs and Citigroup were less ebullient than those of JP Morgan on Wednesday, the Dow Jones industrial average rose 0.5 percent.
After U.S. markets closed, tech stalwarts Google Inc and IBM reported earnings that exceeded already high expectations, showing demand from both consumers and businesses was returning.
However, with Asian shares trading at 14-month highs this week, gains across the region became more modest. Some analysts say share prices have raced up too far ahead of economic fundamentals, but opinions differ on whether they will continue climbing, consolidate around current levels or retreat.
"There's a growing risk of profit-taking on a sense that U.S. shares may be overpriced ...," said Nagayuki Yamagishi, a strategist at Mitsubishi UFJ Securities in Tokyo.
"Even so, the pace of economic recovery seems to be better than expected, as shown by strong U.S. tech earnings, and global stock markets are trending upwards."
Japan Airlines bucked the firmer trend in Tokyo, diving more than 10 percent on a Kyodo news report that the cash-strapped carrier was reconsidering plans to sell shares in its group firms.
Shares in South Korea dipped 0.3 percent on concern that the won's recent strength would hurt exporters. Shares in liquid crystal display panel maker LG Display fell 4.5 percent despite it posting record quarterly profits as the market worried about earnings prospects.
Foreigners, meanwhile, dumped Korean treasuries after the central bank governor told lawmakers late on Thursday that once interest rates start rising, rate hikes would probably be bigger than usual.
Korea is expected to be the next G20 nation to raise interest rates, following Australia's surprise rate rise last week, as the country seeks to stave off a potential property bubble.
Energy stocks in Hong Kong got a lift from the surging oil price, pushing shares in PetroChina, the world's most valuable oil and gas producer, up 1.6 percent.
Thailand's stock market rebounded 1.2 percent in early trade, after sliding 5 percent on Thursday in its biggest drop in a year on concern over the health of the 81-year-old king. The palace said on Thursday that the king's health was improving but he needed time-consuming physical therapy.
DOLLAR WEAKNESS
The dollar found some support against major currencies, except the euro which hit a fresh 14-month high at $1.4968. The high-yielding Australian and New Zealand dollars also hit fresh highs for the year against the dollar.
Oil rose for the seventh straight session, gaining 48 cents to a one-year high of $78.06 per barrel, after data showed unexpectedly steep declines in U.S. inventories.
Oil is heading for a gain of nearly 9 percent this week, buoyed by signs that a global economic recovery is slowly gathering steam and by persistent weakness in the dollar. However, as is the case in stock markets, some analysts believe some profit-taking may be on the cards after the steep price run-up.