* Asian shares heading to biggest weekly gain in a year
* Euro holds gains near 2-month peak vs dollar
* Upbeat ECB comments, stress test details help euro
By Umesh Desai
HONG KONG, July 9 (Reuters) - Asian stocks climbed for a second day and the euro held near two-month highs on Friday, boosted by positive U.S. data and the European Central Bank's cautiously upbeat view of the euro zone's recovery.
The Japanese yen was under pressure as investors cut long positions and shifted towards high-yielding currencies such as the Australian dollar and the New Zealand dollar.
European shares are expected to open higher with futures on STOXX Europe 50, Germany's DAX and France's CAC-40 up 0.6 to 0.9 percent. U.S. data showed on Thursday first-time jobless claims dropped to their lowest level in two months and some large retailers reported solid sales.
In Asia, the MSCI index of Asia Pacific stocks outside Japan rose 1.3 percent, on track for its biggest weekly gain in a year, with the consumer durables and energy sectors outperforming. The index is still down more than 6 percent this year.
Tokyo's Nikkei share average rose 0.5 percent, holding above a key support level after pulling away from a seven-month low.
"The market has factored in worries about Europe and the possibility of a double dip in the U.S. economy, and it's now most likely found a floor," said Kazuhiro Takahashi, general manager at Daiwa Securities Capital Markets.
Interest rate increases by the South Korean and Malaysian central banks have underlined the growing confidence about Asia's recovery after the International Monetary Fund said a double-dip world recession was unlikely.
Fears that recovery from the world's worst downturn in decades could stall had triggered outflows of more than $11 billion from equity funds worldwide in the first week of July and induced the biggest inflows in 18 months for safe haven money market funds, fund tracker EPFR Global said.
Bank of Korea's quarter point rate rise on Friday, its first increase since the outbreak of the financial crisis follows Thursday's hike by Malaysia's central bank, cementing market expectations of solid growth ahead.
"It appears that policymakers across Asia are reasonably confident about the economic outlook despite concerns about the potential impact of euro area weakness and a near-term dip in growth from the fast pace set earlier this year," said Brian Jackson, strategist at Royal Bank of Canada.
But there are several hurdles to the market sustaining its gains with many analysts worried about higher financing costs, lower earnings and tighter liquidity.
"At the end of the day you are looking at a market which is at fair value, faced with tight liquiduity and rising cost of capital and earnings downgrades," said Emil Wolter, head of regional strategy at Royal Bank of Scotland.
"It seems more likely we will become cheap than expensive from here."
HSBC analysts said in a research note that Asian stocks outside Japan were trading at forward price-earnings multiples above those in Russia and Brazil
Around the region, Taiwan's main TAIEX share index recorded its biggest weekly gain in 10 months while the Korea Composite Stock Price Index finished just 2 percent shy of its 2010 peak.
Taiwan's stocks have been outperforming the region in recent sessions on hopes of sustained growth in earnings after China and Taiwan signed a landmark trade agreement in late June.
China's battered stock markets, plagued by liquidity problems due to a flood of issuances, pulled further from 15-month lows struck last week.
The Shanghai Composite index is on course for its biggest weekly gain in a year as the market heaves a sigh of relief the Agricultural Bank of China mammoth offering is out of the way, with the listing due next week.
The market focus has now switched to upcoming data with hopes China's GDP report next week could allay fears of a sharp slowdown.
Among the region's top performers, Hong Kong's consumer goods exporter Li & Fung rose 6.4 percent after the company said it signed three acquisition deals expected to bring in more than $1 billion in revenue in 2011.
Australian energy firm Santos Ltd jumped more than 7 percent after a newspaper reported it was close to inking a deal with Royal Dutch Shell to sell an equity stake in its Gladstone LNG project.
The euro was flat at $1.2694, after it broke past resistance at $1.2673 on Thursday following ECB President Jean-Claude Trichet's comments that he expected the euro area economy to grow "at a moderate and still uneven pace in an environment of high uncertainty."
The euro also got a lift from details about Europe's bank stress tests which heartened investors who saw criteria for the checks were no worse than markets expected.
The Australian dollar steadied after hitting a 2-week high on Thursday on solid Australian jobs data, which revived speculation about near-term rate increases. The New Zealand dollar also held near its highest level since June 28.
U.S. crude for August rose 29 cents to $75.73 a barrel on Friday, after touching an intraday peak of $76 on Thursday, the highest this month. ICE Brent gained 38 cents to $75.09. (Additional reporting by Aiko Hayashi in TOKYO and Kim Yeon-hee in SEOUL; Editing by Kazunori Takada)