Asia crawls higher after upbeat US data, dollar stands tall

TOKYO (Reuters) - Asian stocks crawled higher on Friday as upbeat U.S. economic data helped revive some risk appetite lost following air strikes on Houthi militants in Yemen, while the U.S. dollar rebounded.

Crude oil prices were slightly lower on the dollar's bounce after surging overnight on the escalating conflict in Yemen.

The euro was flat at US$1.0883, knocked off an overnight high of US$1.1052 after the encouraging U.S. data boosted the dollar.

The dollar stood was at 119.17 yen after pulling back from a five-week trough of 118.33 struck overnight against the yen, a safe-haven currency that attracts bids in times of geopolitical tension.

U.S. crude was down 1 per cent at US$50.87 a barrel after rallying 4.5 per cent overnight.

The Saudi military operation against the Iran-backed Houthi rebels has not affected the oil facilities of major Gulf producers.

But fears the conflict could spread and disrupt Middle East shipments have put a floor under the price of oil, which slumped to a six-year low earlier this month.

Violence in Yemen firmly capped Asia-Pacific equity gains for now.

Japan's Nikkei was flat after a loss of 1.4 per cent the previous day, although South Korean and Australian shares rose slightly.

MSCI's broadest index of Asia-Pacific shares outside Japan was up only a modest 0.1 per cent after sliding 1 per cent the previous day.

"The conflict in Yemen saw equities on the back foot in Asia yesterday and should this escalate into a deeper regional conflict, then the risk-off trade is only likely to ramp up," Stan Shamu, market strategist at IG in Melbourne, said in a note to clients.

Stock markets slumped worldwide after Saudi Arabia and allies carried out air strikes in Yemen on Thursday. Germany's DAX, which hit a record high early last week, shed 1 per cent overnight.

Wall Street also closed lower on Thursday but key indexes there trimmed much of their earlier losses thanks to robust U.S. jobless claims and services sector data.

While keeping one eye on developments in the Arabian Peninsula, the markets will keep another fixed on a speech by Federal Reserve Chair Janet Yellen later on Friday.

Yellen is scheduled to speak on "monetary policy" and her comments will be closely analysed after the Fed's dovish comments last week bruised the dollar.