By Dominic Lau
TOKYO (Reuters) - Asian shares held steady early on Thursday, although Japanese stocks look set to head back towards a 5-1/2 year peak reached in May after the yen fell sharply on the back of relatively positive U.S. economic data.
U.S. jobless claims unexpectedly fell last week and the Thomson Reuters/University of Michigan consumer confidence improved from a preliminary reading, while the Chicago PMI held up better-than-expected in November after surging in the previous month.
A soft October durable goods report was the only dent to an otherwise upbeat set of figures.
"The U.S. economic data were very pro-tapering, despite the weakness in the durable goods data," Steven Englander, global head of G10 FX strategy at Citigroup, wrote in a note.
Investors are focusing more closely on data as they weigh the odds of when the Federal Reserve is likely to begin dialling back its $85 billion-a-month bond-buying campaign. Many investors expect the Fed will begin tapering in the first quarter of next year if the economy continues to improve.
"On tapering and USD, we have been struck by how much of the market continues to assign a very low probability of a December or January tapering," Englander said.
"Investors are focused on next week's labour market release, but the stronger than expected data suggests that some revision of probabilities is merited even going into the numbers."
The dollar was up 0.1 percent at 102.25 yen, adding to a 0.8 percent rise overnight and hitting a six-month high.
As the yen tumbled, Tokyo's Nikkei benchmark was expected to race higher in the open and close in on a 5-1/2 year peak reached in May. Nikkei futures rose 1.1 percent.
MSCI's broadest index of Asia-Pacific shares outside Japan was little changed.
On Wednesday, the Dow Jones industrial average and the Standard & Poor's 500 closed at record highs while the tech-heavy Nasdaq finished at a 13-year peak. U.S. markets will be closed on Thursday for the Thanksgiving holiday.
The dollar was steady at $1.3576 to the euro, having hit a four-week low in the previous session after news that Germany's two major parties had formed a grand coalition deal.
Among commodities, U.S. crude prices stabilised at around $92.30 a barrel, having fallen 1.5 percent overnight as a higher-than-expected build in inventories weighed down prices.
Gold was also steady at about $1,238.30 an ounce, after a 0.4 percent drop in the previous session and not far from a four-month low of $1,227.34 touched on Monday.
(Editing by Richard Pullin)