Asian Shares Ease As U.S. Data Cast Doubt On Recovery

(Reuters) -- Asian shares slipped Friday as disappointing U.S. economic data stirred doubts about the strength of recovery, while the yen weakened after the Bank of Japan flagged the prospect of further monetary easing to support the struggling economy.

The return of the euro zone debt crisis also kept riskier assets under pressure, with a better-than-feared Spanish bond auction failing to allay concerns that Spain may follow Greece, Ireland and Portugal in needing an international bailout.

MSCI's broadest index of Asia Pacific shares outside Japan <.MIAPJ0000PUS> and Japan's Nikkei share average <.N225> both edged down 0.2 percent.

Wall Street stocks <.SPX> fell 0.6 percent on Thursday, as worries about the health of the wider economy overshadowed a strong start to the corporate earnings season from the likes of Bank of America (BAC.N) and Morgan Stanley (MS.N).

The number of Americans claiming unemployment benefits for the first time fell less than expected last week, suggesting a slowdown in job creation. Other data showed factory activity in the Mid-Atlantic region slowed sharply this month and U.S. home resales fell for a second month in March.

The dollar bought around 81.65 yen, having hit a 1-1/2-week high of 81.74, and the euro rose as high as 107.35 yen after Bank of Japan Governor Masaaki Shirakawa reiterated on Thursday that the central bank would continue to pursue powerful monetary easing until its 1 percent inflation target was in sight.

The euro emerged unscathed from a choppy session on Thursday to trade around $1.3140, almost unchanged on the day.

It hit a high of $1.3166 following the Spanish bond sale but then dropped on rumors, later denied, of a possible French rating downgrade.

Spain has emerged as the latest source of concern for investors in recent weeks, as long-standing fears about the balance sheets of domestic banks following a property bust have combined with worries about the country's fiscal health in the face of a harsh austerity program and weakening economy.

Madrid sold 2.5 billion euros in 2- and 10-year bonds, at the top end of the targeted amount. But yields on the key 10-year bond were higher, reflecting fears that it may miss budget deficit targets.

Oil was steady, with Brent crude edging down a few cents to just below $118 a barrel.

(Editing by Richard Pullin)