Global shares firm on Merkel remarks

Shares firmed on Friday as German Chancellor Angela Merkel voiced support for the European Central Bank's efforts to contain the euro zone's debt crisis, soothing investor nerves and prompting them to scale back safety bids.

Merkel said ECB President Mario Draghi's declarations last month to do whatever it takes to save the euro and raising the prospect of buying the bonds of stricken Spain and Italy were "completely in line" with the approach taken by European leaders. She also called for Europe's swift fiscal policy integration, saying time was running short.

Merkel's comments buoyed equities and oil on Thursday as they kept hopes for more stimulus while the dollar was pressured by lacklustre data, with a weaker dollar supporting commodities.

World equities rose to near 3-1/2 month highs on Thursday on hints China is eyeing new support for its economy. European shares rose to within touching distance of their 2012 peaks.

MSCI's broadest index of Asia-Pacific shares outside Japan edged up 0.2% while Japan's Nikkei stock average opened up 0.3%.

"Merkel's remarks heightened expectations of a solution to the euro zone's problems," said Lee Sang won, an analyst at Hyundai Securities.

"Caution played out this week after last week's market rally, but I don't doubt the market's overall upward trajectory, with the macro economic situation improving."

The euro traded at USD 1.2356, not far from Thursday's high of USD 1.2373. The dollar eased 0.1%  to 79.24 yen after reaching 79.408 yen on Thursday, its highest in more than a month.

Oil fell, with US crude futures easing 0.3% to USD 95.28 a barrel.

While few doubt the ECB will take some decisive steps to tackle the three-year debt crisis, the outlook was less clear for the Federal Reserve's future policy tactics.

Such uncertainty has weighed on US Treasuries, pushing the benchmark 10-year Treasury yield up to a three-month high of 1.862% on Thursday.

"(US) data continue to firm up. Additional easing by the Fed is unlikely, given this macroeconomic backdrop," Barclays Capital said in a research note.

"Market volatility has remained low, despite low liquidity. The lack of information regarding key market risks has been an important reason for this ... Risky assets may continue to receive some near-term support as investors search for anything with some risk premium associated with it," it said.

Thursday's data showing a trend measure of Americans signing up for new jobless benefits fell close to a four-year low last week, building permits rose in July even when housing starts fell, and a weak regional factory gauge together suggested US recovery may pick up later this year but is still vulnerable.

These followed a string of recent solid reports on jobs, industrial output and retail sales for July.