By Chikako Mogi

TOKYO (Reuters) - Encouraging global data and Wall Street's extended record run boosted Asian shares to a near two-year peak on Thursday, with strong Australian jobs data and a surprise interest rate cut by South Korea further cementing the positive mood.

Japanese stocks were within striking distance of fresh five-year highs, tracking global fund flows into equities as monetary easing depresses returns on bonds while unclear prospects of world economic growth weigh on commodities prices.

"Japan outperforms its global peers. But it has more upside because speaking from a standpoint of an expected improving economy, Japan seems most promising (for investors)," said Hikaru Sato, senior technical analyst at Daiwa Securities.

"More growth measures are expected in the second half of this year by the Japanese government, while in the U.S. people are still carefully monitoring its economic data ... European markets started to pick up but worries about persistent debt problems linger."

The Nikkei stock average <.n225> rose as much as 0.9 percent to 14,409.82 points, just off Wednesday's intra-session peak of 14,421.38, its highest since June 2008. <.t></.t></.n225>

MSCI's broadest index of Asia-Pacific shares outside Japan <.miapj0000pus> was up 0.3 percent, after climbing as much as 0.5 percent to its highest since July 2011 earlier in the day.</.miapj0000pus>

South Korean shares <.ks11> rose 1 percent after the central bank unexpectedly cut interest rates by 25 basis points to 2.50 percent, the first cut in seven months, as weak industrial growth suggested the economy was not recovering as quickly as expected.</.ks11>

"Bank of Korea's rate cut decision removes policy risk that had weighed on South Korean share market," said Kim Young-june, a market analyst at SK Securities.

Australian shares <.axjo> erased earlier losses to inch up 0.1 percent following a strong local labor report which helped pare market bets for an interest rate cut in June, after the Reserve Bank of Australia lowered interest rates earlier this week. The Australian dollar rallied to a session high of $1.0253 from $1.0185 before the data.</.axjo>

Markets in Hong Kong and China largely bucked the firmer trend as data showed China's annual consumer inflation quickened to 2.4 percent in April from March's 2.1 percent, still below the central bank's 3 percent forecast for 2013 but limiting its room to easy policy further if needed to shore up economic growth.

More worryingly, producer prices dropped 2.6 percent in April, more than expected, due to subdued factory and investment growth.

CURRENCIES TAKE BACK SEAT

In contrast to the clear uptrend in global equities, major currencies have lost direction, having rallied sharply against the yen over the past six months on hopes for aggressive reflationary policies from deflation-trapped Japan.

"The phase in which investors can make huge profits from betting on big cash currency positions is over, and giving way to equities," said a senior official at a big Japanese investor.

"Global equities markets are buoyed by the monetary easing race, regardless of economic fundamental outlooks, and as long as central banks keep their accommodative stance, the uptrend in stocks will remain in place."

Global equities rose overnight, buoyed by strong Chinese trade data and signs that Germany may escape a sharp slowdown after the euro zone's largest economy said its industrial output unexpectedly rose in March, following a similarly surprising rise in industrial orders.

The upbeat data followed last Friday's strong U.S. payrolls, providing relief to markets rattled by a string of soft economic reports.

The Standard & Poor's 500 Index <.spx> closed at an all-time high for a fifth day on Wednesday while the Dow Jones industrial average <.dji> ended at a record peak for a second straight day.</.dji></.spx>

In Europe, the FTSEurofirst 300 <.fteu3> index of top European shares finished at its highest closing level since mid-2008, while the euro zone's blue chip index <.stoxx50e> marked a near two-year closing high.</.stoxx50e></.fteu3>

The euro remained resilient against the dollar, inching up 0.1 percent to $1.3159 but easing 0.1 percent against the yen at 130.01 yen. The dollar fell 0.2 percent against the yen to 98.81 yen.

"Everyone understands what the 'problem' with the Euro is but they can see that shorting it has been a graveyard trade," Kit Juckes, a Societe Generale strategist, said in a note to clients.

"Bad news is expected and priced in, the balance of payments isn't a negative and real rates are no lower than anywhere else. The result is that there is no conviction about the timing of Euro weakness."

U.S. crude futures were up 0.1 percent at $96.68 a barrel while Brent was also up 0.1 percent to $104.49.

(Additional reporting by Ayai Tomisawa in Tokyo and Jungyoun Park in Seoul; Editing by Shri Navaratnam & Kim Coghill)

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