Asian stocks fell on Thursday as investors took profits from a recent rally after the Federal Reserve's caution on the U.S. economic recovery, even as Chinese data pointed to only a mild cooling in that economy.

Sentiment was undermined by the Agricultural Bank of China's <601288.SS> lackluster debut in Shanghai after its $22 billion initial public offering, which is set to be the world's biggest.

European shares were set to open lower, with financial spreadbetters expecting Britain's FTSE 100 <.FTSE> to open down as much 0.2 percent, Germany's DAX <.GDAXI> to open as much as 0.2 percent and France's CAC <.FCHI> to open 0.4 percent lower.

The MSCI index of stocks in Asia-Pacific outside Japan <.MIAPJ0000PUS> was down nearly 0.8 percent as investors took profits, a day after the index hit a three-week high.

The index had briefly turned higher after the Chinese data.

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 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.

With growth slowing and consumer price inflation pressures remaining essentially steady, the message is that currency appreciation will remain modest and there is no strong pressure on the authorities to increase interest rates in the near term, analysts at Rabobank said in a note.

At the margin, there is modest support here for 'risk-on' trades as the fear of a contractionary Chinese rate hike eases.

With no nasty surprises from China, investor concern returned to the health of world's biggest economy after minutes of the Federal Reserve's June meeting showed officials were more concerned with the pace of the U.S. recovery.

Japan's Nikkei index <.N225> shed just over 1 percent.

AGBANK WEIGHS

Shanghai stocks <.SSEC> fell 0.8 percent, reversing earlier gains, after Agricultural Bank of China <601288.SS> disappointed with a lackluster Shanghai debut. Its shares rose only marginally in the first few minutes of trading.

Banks repossessed a record number of U.S. homes in the second quarter, though foreclosure filings eased slightly from earlier in the year, real estate data firm RealtyTrac said on Thursday. The root problems of job losses persist, making a sustained recovery in the housing market elusive.

Investors were waiting for corporate earnings results, including those from Google and JPMorgan Chase

The Aussie dollar turned lower after receiving a short-lived boost from the Chinese data.

The Australian dollar fell to $0.8773, down almost

0.7 percent on the day.

The euro hovered near $1.2725, not far from its two-month high of $1.2778 hit on Wednesday.

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

(Editing by Jan Dahinten)

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