(Reuters) - Asian shares rose and the euro hit a seven-week high Thursday as the Federal Reserve's minutes raised the prospect for more U.S. stimulus while uncertainty continued over progress in Europe's debt crisis, including the European Central Bank's bold action.

Investors will be looking for clues on the outlook for the world's second largest economy China in the second half of the year, when China HSBC's PMI figure, a measure for private-sector manufacturing activity, is released around 0230 GMT.

Slowdown in China's growth and demand, stemming from the slump in euro zone economy, has dragged exports from Japan, South Korea and Taiwan, threatening to derail their recovery.

U.S. stocks erased most losses, Treasury bond prices rose and the dollar fell after the minutes from the July 31-Aug. 1 Fed meeting showed it was likely to deliver another round of monetary stimulus "fairly soon" unless incoming data point to "substantial and sustainable" strengthening in the recovery.

MSCI's broadest index of Asia-Pacific shares outside Japan <.MIAPJ0000PUS> inched up 0.3 percent while Japan's Nikkei stock average <.N225> opened down 0.6 percent, weighed by the yen's strength. .T

The euro touched $1.2544 in early Asia, its highest since July 4. The dollar traded at 78.55 yen, after slipping to a low of 78.27 yen on Wednesday. The Australian and New Zealand dollars rallied against the U.S. dollar on Thursday on the minutes indicating the Fed's willingness to ease more.

But there were conflicting views on how much stimulus the Fed may decide on.

"The data released since the Aug. 1 conclusion does little to sway the 'substantial and sustainable' requirement," said Andrew Wilkinson, chief economic strategist at Miller Tabak & Co. in a note.

"It seems that the stage is now set for (Fed Chairman Ben) Bernanke to expand at his Jackson Hole meeting at the end of this month upon the discussions that took place inside the Fed at the start of August," he said, referring to the gathering of central bankers and economists.

The Fed's last policy meeting preceded a slew of positive reports including retail sales, industrial output and nonfarm payrolls, which boosted the dollar and lifted 10-year Treasury yields to a three-month high above 1.85 percent last week, up sharply from a record low 1.38 percent hit on July 25.

The positive economic reports have scaled back expectations somewhat, but hopes remain for the Fed to take further stimulus at its September meeting.

"Since the meeting of the minutes, the environment has changed to make it doubtful if the Fed will take as aggressive an action as markets appear to have taken from the minutes," said Yuji Saito, director of foreign exchange at Credit Agricole in Tokyo, noting positive U.S. data, improving mood surrounding Europe's woes and surging grains prices.

Deepening quantitative easing could fuel inflationary pressures as money will likely flow into grains, further pushing up prices of U.S. corn and soybean which hit record highs this summer due to the country's worst drought in 56 years, Saito said.

"It may still take some stimulus but that has already been anticipated, and the Fed has merely kept such expectations intact. Players probably sold the dollar to adjust their positions ahead of meetings surrounding Greece," said Saito.

Market sentiment has also been underpinned after the ECB suggested it will come up with measures to contain surging yields of indebted Spain and Italy.

Uncertainty lingered over the effectiveness of Greek Prime Minister Antonis Samaras' attempts to convince other European officials that his country should be given more time to meet targets for deficit cuts.

Eurogroup chief Jean-Claude Juncker kept alive Greek hopes of winning more time to push through austerity cuts but warned the country was staring at its "last chance" to avoid bankruptcy.

(Editing by Michael Perry)

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