Asian shares extended gains to nine-month highs on Friday, on track for a solid weekly rise, as better-than-expected economic data from China lifted risk sentiment that was already buoyant after record highs on Wall Street.

But European stock markets were expected to dip lower at the open, while travel stocks could come under pressure after an attacker killed 80 people in the French Riviera city of Nice late on Thursday.

Financial bookmakers at IG and CMC Markets expected Britain's FTSE 100 and Germany's DAX to open 0.1 per cent lower, while France's CAC was seen down 0.4 per cent.

“European markets look set to open lower on Friday, coming off multi-month highs in the wake of the horrific attack last night during Bastille Day celebrations in Nice, France,” Jasper Lawler, market analyst at CMC Markets UK, said in a note.

Nice attack

An attacker killed 80 people and injured scores when he drove a truck at high speed into a crowd watching a fireworks display on Thursday night.

MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.4 per cent, off intraday session highs it hadn't reached since October, but it was still on track to log a robust weekly gain of more than 4 per cent for the week.

On Thursday, both the Dow Jones industrial average and the S&P 500 closed at record highs.

China GDP growth

China's economy grew 6.7 per cent in the second quarter from a year earlier, steady from the first quarter and slightly better than expected as the government stepped up efforts to stabilise growth in the economy.

Industrial output and retail sales also beat forecasts, which helped alleviate fears of slowing momentum, though fixed-asset investment growth slipped and missed market expectations.

“The data showed the signs of stabilisation, which is very encouraging,” said Julian Wang, economist for Greater China at HSBC.

“However, public sector investment and housing market are slowing down. So the challenges still loom quite large in the second half of the year.”

China stocks wobbled, with the CSI300 index of the largest listed companies in Shanghai and Shenzhen, as well as the Shanghai Composite Index both down 0.1 per cent in choppy trading.

Japan's Nikkei added 0.7 per cent, gaining more than 9 per cent for the week with the tailwind from a weaker yen after Japanese Prime Minister Shinzo Abe called for a fresh round of fiscal stimulus following last weekend's victory for his ruling coalition.

'Abenomics' reform plan

Part of the yen's recent weakness was also due to some investors' hopes that former US Federal Reserve chair Ben Bernanke's meetings with Japanese leaders this week would herald the adoption of further stimulus policy, to help meet the goals of the ambitious “Abenomics” reform plan.

“The amount of outflows from Japan year to date versus the amount of inflows in the last two weeks, it's been a significant reversal,” said Logan Best, vice president of securities trading at INTL FCStone Financial in Orlando.

“We're talking about billions of dollars being put back to work, in the past week. I'm seeing significant buyers every day,” he said. “There's definitely some hope rekindled in Abenomics.”

News of the attack in France had lifted the safe-haven yen in early trading.

“Initially, some US short-term guys used it as an excuse to test the downside and sell ahead of the long weekend in Tokyo,” said Kaneo Ogino, director at foreign exchange research firm Global-info Co in Tokyo, referring to Monday's public holiday for which Japanese markets will close.

Dollar vs yen

The dollar added 0.4 per cent to 105.70 yen, having dipped as low as 105.05 earlier in the session. It subsequently recovered to rise to a three-week high of 106.32 yen, and was on track to gain more than 5 percent for the week against its Japanese counterpart.

The euro was up 0.2 per cent at 117.59 yen, up over 5 per cent for the week.

BoE policy stance

The pound was up 0.4 per cent at $1.3395, on track for a weekly gain of 3.5 per cent, after earlier rising as high as $1.3481. On Thursday, the Bank of England surprised many investors by leaving interest rates unchanged instead of cutting to cushion the economic impact of Britain's vote last month to leave the European Union.

Oil prices gave up some of their overnight gains in early trading, after rising 2 per cent on Thursday as traders covered short positions after data showing weak US fuel demand. The bright signs of stabilisation in the Chinese economic data could not offset concerns about a global supply glut.

Brent crude futures slipped 1 percent to $46.92 a barrel, while US crude also fell 1 per cent to $45.23.

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