Asian stocks headed for their best week in nearly three years after a long-awaited plan to resolve the European debt crisis sparked a huge relief rally in riskier assets, while the euro took a breather after jumping to a seven-week high.

European shares were set to extend the previous session's sharp rally, with financial spreadbetters seeing gains of as much as 1 percent in Germany's DAX <.GDAXI>, 0.7 percent in France's CAC-40 <.FCHI> and 0.3 percent in Britain's FTSE 100 <.FTSE>.

Analysts cautioned there was still a long way to go to find a lasting solution to Europe's economic woes, but the initial measures reached by euro zone leaders reinforced growing confidence in recent days that they were prepared to tackle the issue seriously.

The measures announced are partly political and some details about their implementation are still lacking, said Cyril Beuzit, strategist at BNP Paribas.

However, although these measures may not yet be seen as the final solution ... they are clearly a step in the right direction, which should help restore some confidence in the market.

Euro zone leaders are now under pressure to finalize details of their plan to slash Greece's debt and strengthen the European Financial Stability Fund (EFSF), possibly through investment by emerging economies.

The head of Europe's bailout program said on Friday he does not expect to reach a conclusive deal with Chinese leaders during a visit to Beijing.

While the EU agreement has received a big tick of approval from markets, investors will be able to gauge the extent to which it has improved sentiment on debt of highly-indebted countries at an Italian auction later on Friday.

We've been here before, the market reacts very positively and then over time realizes it hasn't solved the problem, cautioned Joseph Capurso, forex strategist at Commonwealth Bank.

The focus also shifts to a Group of 20 meeting next week in Cannes, southern France.

RISK RALLY

For the moment, investors cheered progress, and shrugged off the lack of details on Greek debt relief.

European shares climbed to a 12-week high and Wall Street jumped 3 percent, pushing the S&P 500 <.SPX> benchmark over its 200-day moving average for the first time since early-August.

Risk appetite was further supported by data showing the U.S. economy grew at its fastest pace in a year in the third quarter, a welcome respite for a financial system that seemed on the brink of a recession some weeks ago.

Corporate earnings in the United States have also bolstered hopes of a fourth-quarter rally.

According to Thomson Reuters Starmine, about half of the S&P 500 constituents have reported quarterly results with 79 percent beating or meeting analyst expectations.

The MSCI Asia Pacific ex-Japan index rose 1.3 percent and is up nearly 10 percent so far this week.

In Asia company news, Samsung Electronics <005930.KS> surpassed Apple Inc as the world's top smartphone maker with than 40 percent shipment growth and forecast strong fourth-quarter sales, sending its shares up 1.8 percent.

Japan's Nikkei <.N225> closed up 1.4 percent despite the yen hitting record highs against the dollar for three days in a row.

The dollar index <.DXY> was up 0.2 percent after falling some 1.6 percent, its biggest one-day fall since May 2009, while the euro edged off its peak.

Traders said funds that had been underweight risk in the past few months piled back into markets for fear of missing out on a more sustainable rally into the year-end, but cautioned that the euro remains vulnerable in the longer term as the EU still needs to finalize its latest plans.

The euro, which hit a seven-week high of $1.4248, slipped 0.1 percent to $1.4171. Traders pointed to small offers starting to build up above $1.4200 and stops at $1.4260.

The weaker U.S. dollar prompted the People's Bank of China to set the yuan's central parity rate at a record high of 6.3290 on Friday, the highest level since the revaluation in 2005.

The Australian dollar was on course for its biggest monthly jump since May 2009, up 10.4 percent for the month to date.

Brent crude slipped 0.4 percent to around $111.62, but prices have posted a weekly gain of almost 2 percent. Prices have also pushed the front-month Brent 200-day moving average above $112.25 a barrel.

Shanghai copper futures opened up 6 percent to its daily limit but pared about half its gains by early afternoon.

Spot gold was little changed at $1,742.60 an ounce by 0440 GMT (12:40 a.m. EDT) and was poised for its biggest weekly gain since January 2009.