(Reuters) - Asian shares rose Friday on better-than-expected demand for Italian sovereign debt, shrugging off the failed rocket launch by North Korea before the markets opened.

The launch itself has very limited impact to broad financial markets, said Yuji Saito, director of the foreign exchange division at Credit Agricole Bank in Tokyo.

But North Korea has lost face, and this could push them to developing nuclear weapons, keeping medium- to long-term tension, he said. That's the longer-term risk for the markets, and we can't anticipate how that would impact markets just yet.

For now, the focus of the markets remains on growth prospects and the euro zone debt crisis, and sentiment has improved with some encouraging data from Australia, China and U.S. earnings, he said.

MSCI's broadest index of Asia Pacific shares outside Japan <.MIAPJ0000PUS> inched up 0.5 percent while Seoul shares <.KS11> opened up 0.8 percent. Japan's Nikkei average <.N225> also opened up 0.9 percent.

Major U.S. and European stock indexes rose over 1 percent while the euro gained on Thursday, as a positive outcome of the Italian bond sale and speculation over China's gross domestic product due on Friday topping forecasts revived risk appetite.

China is set to report first-quarter GDP at 0200 GMT, with a economists expecting the economy accelerated by 8.3 percent, its slowest pace in nearly three years. But it would still be above the government's full-year growth target of 7.5 percent and point to a soft economic landing.

Chinese bank lending spiked in March, a sign of fresh traction in Beijing's bid to boost credit creation to support a cooling economy.

Italy's debt rallied for a second day running on Thursday, pushing its 10-year bond yields down 13 basis points to 5.40 percent and the yield on three-year benchmark tapped at auction down 12 bps to 3.84 percent.

Italy's 4.88 billion euro sale produced mixed results, but some had anticipated a weaker auction after Spain failed to draw enough demand for its auction last week.

Thursday's sale brings Italian bond issuance at nearly 37 percent of an estimated yearly target of 215 billion euros, while Spain is almost halfway through its annual funding plan.

The euro steadied at $1.3185, after hitting a 1-week high of $1.3213 on Thursday. The dollar held firm against the yen at 80.95 yen.

Other data on Thursday showed the U.S. trade deficit shrank 12.4 percent to $46 billion in February for the biggest month-to-month decline since May 2009, as exports hit a record high, bolstering optimism over the outlook for corporate earnings.

Oil rose for a second straight day on Thursday on the China speculation and as a weaker dollar triggered buying of riskier assets. U.S. crude futures was up 0.2 percent to $103.82 a barrel on Friday. Brent crude settled up $1.53 at $121.71 on Thursday.

China Nuclear weapons Australia Gdp