Asian stocks hit a 10-month peak on Friday, with Hong Kong vaulting back to levels last seen before the collapse of Lehman Brothers as investors rushed into equities following upbeat corporate earnings around the world.

But gains were limited and higher-yielding currencies lost ground as some investors moved to book profits on the run-up this week, with some technical signals flashing warning signs that the risky asset surge may be due for a reversal.

After the U.S. closing bell, Microsoft Corp , Amazon.com Inc and American Express posted disappointing quarterly results, sending their stocks lower. S&P futures were down slightly in Asia. <.N>

European shares were set to dip at the open before Germany's Ifo survey of business confidence, British second-quarter GDP and flash manufacturing snaphots. Futures on the Dow Jones Eurostoxx 50 shed 0.4 percent.

Hong Kong's Hang Seng index <.HSI> pushed above the 20,000 mark at the start of trade to hit its highest since early September last year, making Asian markets among the first to retake levels last seen before Lehman's demise.

The yen clawed higher on a dip in the Australian and New Zealand dollars, which retreated along with oil prices and other commodities. Copper prices recoiled from a nine-month high.

South Korea reported its economy expanded at its fastest pace since 2003 in the second quarter, nudging bonds lower and buoying stocks.

South Korea's Samsung Electronics <005930.KS>, the world's top maker of memory chips and LCD screens, reported its best quarterly profit in 2- years. Samsung's shares edged up 0.7 percent, outperforming the 0.4 percent rise in Seoul's benchmark KOSPI index <.KS11>.

Gains are not so robust as markets have been on uninterrupted gains for several days now, said Kim Young-june, a market analyst at SK Securities in Seoul.

The relentless surge in Asian shares has taken the benchmark MSCI index of Asia-Pacific shares outside Japan up 73 percent from its March lows, stoking some worries among analysts that an asset bubble may be forming as investors rush to take part.

The MSCI benchmark for Asia <.MIAPJ0000PUS> was up 0.3 percent on the day and 4.4 percent on the week, tracking the weekly gain in the MSCI index of world stocks <.MIWD00000PUS>.

On Thursday the U.S. S&P 500 <.SPX> jumped 2.3 percent after busting through technical resistance.

ASSET BUBBLES

A sudden rebound in property markets in China, Hong Kong and other parts of Asia has already stirred concerns about inflationary pressures.

The Shanghai Securities News reported on Friday that an unpublished Chinese government report said speculative demand from property started to emerge in May and June, but that officials were holding off from changing policy for now.

The Shanghai Composite index <.SSEC> was up 0.6 percent and touched a 13-month intraday peak, taking this year's gains to 84 percent.

Valuations have risen sharply on Chinese shares. The price-to-earnings ratio on the MSCI China <.MSCICN> based on earnings forecasts one-year ahead stands at 19.97, the highest in 17 months and above the 15-year average of 12.57.

But some analysts said market watchers were overreacting by already fretting over asset bubbles.

China has clearly begun a new asset-price inflation cycle. But having just emerged from a significant economic downturn, a speculative bubble remains quite far down the road, said Andy Rothman, China macro strategist at CLSA, in a note to clients.

Rothman said statements by the Chinese Communist Party's decision-making Poliburo on Thursday reaffirmed that Beijing will not be taking tightening steps in coming quarters.

Hong Kong's Hang Seng <.HSI> gained 0.5 percent to 19,909 after having briefly climbed above 20,000.

Japan's Nikkei average <.N225> rose 1.6 percent and was on track for an eighth straight day of gains. Panasonic Corp <6752.T> jumped nearly 8 percent after JPMorgan raised its rating on the stock.

YEN EDGES UP, KOREAN BONDS STEADY

In currencies, the yen pushed higher as market players took profits on the jump in the Aussie and kiwi against the low-yielding Japanese currency.

The dollar was down 0.3 percent at 94.70 yen, while the Aussie dipped 0.1 percent to 77.20 yen. The euro was little changed against the dollar at $1.41750.

The dollar's slight dip helped boost gold prices $1.70 an ounce to $948.85.

Korea government bond futures dipped a tick to 109.79 and fell back near a one-month low hit the previous day after the solid GDP figures.

But analysts cautioned that the recovery was not strong enough yet to be self-sustaining.

South Korea is unlikely to change its policy stance. The recovery is not on solid ground yet, said Daniel Soh, currency strategist at 4Cast in Singapore. We may see some monetary fine-tuning, rather than tightening, in the second half.

(Additional reporting by Jungyoun Park in Seoul)

(Editing by Kazunori Takada)

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