Asian stocks erased most of their early losses on Thursday and the Australian dollar jumped after a spate of Chinese data confirmed the economy was slowing gradually but delivered no nasty surprises.

China's annual economic growth eased to 10.3 percent in the second quarter from 11.9 percent in the first quarter, a touch weaker than expected, in response to credit curbs and the fading of government fiscal stimulus.

Nevertheless, the data showed concerns about a steep slowdown in the world's third-largest economy were overblown. Inflation at the producer and consumer level also eased in June from May, reducing the need for further policy tightening.

The MSCI index of stocks in Asia-Pacific outside Japan <.MIAPJ0000PUS> was virtually flat at 0300 GMT after falling as much as half of a percent before the data was released.

Stocks in Hong Kong <.HSI> and Shanghai <.SSEC> rose briefly before slipping back into negative territory, while Australian stocks <.AXJO> reversed most of their early losses.

Concerns about the health of the global economy persisted, after minutes of the Federal Reserve's June meeting showed officials were more concerned with the pace of the U.S. recovery.

That added to jitters stoked by a weak report on June retail sales and snapped U.S. stocks' six-day winning streak on Wednesday, with the S&P500 ending a touch lower. <.N>

AUSSIE DOLLAR WHIPSAWS ON CHINA REPORTS

The Australian dollar rose to $0.8824, up around a quarter of a cent from before the data announcement.

Against the Japanese yen, the Aussie rose to 77.90 yen from around 77.50 yen before the data. It is still down 0.2 percent on the day.

The dollar was under pressure, holding near two-month lows against a basket of currencies <.DXY>.

Meanwhile, S&P futures erased earlier losses and were 0.17 percent higher on the day at 1,093.00, compared to around 1,090 before the data.

Prior to the data, the Australian dollar had dipped after an official Chinese paper reported the country's economy may slow more sharply than expected in the second half of this year, which could cool its voracious demand for commodities.

The report prompted selling in high-yielding currencies which are seen as proxies for global growth, such as the Australian dollar.

(Editing by Kim Coghill)

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