Asian shares struck a seven-month high on Thursday as a slew of Chinese data pointed to stabilization in the world's second largest economy, and positive U.S. housing data helped ease worries about a sharper slowdown in global growth.

The brighter tone for risk assets weighed on safe-haven U.S. Treasuries, the dollar and the yen.

China's third-quarter gross domestic product grew 7.4 percent from a year earlier, the slowest pace since the first quarter of 2009 and marking the seventh straight quarter of slower growth, but matching expectations.

Other data such as fixed asset investment, retail sales and industrial output slightly exceeded forecasts.

"This is within expectations, the economy is showing signs of stabilizing, that is good news," said Dong Tai, economist at Credit Suisse in Hong Kong. "We think that with rebounding property markets, stabilizing export orders, resuming consumption, we probably have seen the bottom of the economy."

The MSCI index of Asia-Pacific shares outside Japan <.MIAPJ0000PUS> gained 0.6 percent, rising for a third day in a row with its energy <.MIAPJEN00PUS> and materials <.MIAPJMT00PUS> leading the increase.

Hong Kong shares were up 0.4 percent and Shanghai shares inched up 0.5 percent, while shares in Australia jumped 1.1 percent to a fresh 15-month high, supported by the resources sectors which drew strength from signs the slowdown is drawing to an end in China, Australia's largest export market.

The commodities-sensitive Australian dollar briefly touched a two-week high of $1.0395 after the Chinese data, and last traded at $1.0384.

The benchmark Thomson Reuters-Jefferies CRB index , a global commodities benchmark, has recovered less than a third of its drop from its recent peak in September, offering more scope on the upside.

"The data for September suggests China's economy likely bottomed in July-August and is set to recover, and this will help ease fears about further downside risks to the Chinese economy," said Hirokazu Yuihama, a senior strategist at Daiwa Securities. "There aren't clear signs that demand from China is picking up but sentiment for commodities is improving and this should eventually support growth-sensitive assets," he said.

Japan's Nikkei average <.N225> jumped 1.7 percent to its highest in nearly three weeks on a weaker yen.

YEN SLIPS

The dollar rose to a one-month high of 79.22 yen, with traders keen to see if it will test its 200-day moving average which stands around 79.40.

The dollar index , which measures the greenback against a basket of six major currencies, inched up 0.1 percent to 79.120, off a one-month low of 78.935 seen on Wednesday.

U.S. housing starts surged 15 percent in September, the fastest pace in over four years, bolstering sentiment that had already perked up on a fall in the U.S. jobless rate and strong retail sales.

That lifted Wall Street despite concerns that sluggish world economic growth would curtail corporate America's year-long streak of profit growth.

As investors recovered some risk appetite, the benchmark 10-year U.S. Treasury yield rose to a one-month high of 1.81 percent on Wednesday for its biggest two-day rise since late July.

"The broad USD is battling between its use as a funding currency to invest in emerging markets, and a rise in its value linked to higher yields and growth expectations," Societe Generale said in a research note.

"For now this translates into a higher USD/JPY as the most yield sensitive currency," the note said, explaining the dollar's advance against the yen

Investors were cautious ahead of a meeting of European leaders in Brussels on Thursday and Friday, watching for possible discussions over bailouts for struggling Spain and Greece.

The euro steadied around $1.3110, after reaching a one-month high of $1.3140 on Wednesday.

European leaders will try to bridge deep differences over plans for a banking union at the summit, but no substantial decisions are expected, reviving concerns about complacency in tackling the three-year-old debt crisis.

Clear decisions on helping Cyprus, Greece and Spain may also only come at a finance ministers' meeting next month, officials say.

Asian credit markets firmed, with the spread on the iTraxx Asia ex-Japan investment-grade index tighter by 3 basis points.

U.S. crude futures were steady at $92.10 a barrel while Brent inched up 0.2 percent to $113.40.

(Editing by Simon Cameron-Moore)