* MSCI Asia ex-Japan hits highest since July 2011, Nikkei rises
* South Korea joins monetary easing race, Seoul shares jump
* Australia reports strong jobs data, China CPI rises
* European shares seen mixed
By Chikako Mogi
TOKYO, May 9 (Reuters) - Strong Australian jobs data and a surprise interest rate cut by South Korea underpinned Asian shares on Thursday after Wall Street's extended record run, but prices were capped by concerns that a pick-up in inflation in China will limit its policy options.
"Traders are growing ever more uneasy about this rally, where one has to ignore the fundamentals and put your blind faith in the central banks," Jonathan Sudaria, a trader at Capital Spreads, said in a note to clients.
"Considering that 5 OECD central banks have cut rates in May alone so far, those who have bet against the rally have become martyrs to their belief that fundamentals still matter."
European stock markets were seen narrowly mixed, with financial spreadbetters predicting London's FTSE 100, Paris's CAC-40 and Frankfurt's DAX would open up as much as 0.2 percent and down as much as 0.2 percent. The FTSEurofirst 300 index of top European shares finished at a five-year closing high the day before.
U.S. stock futures were steady, suggesting a subdued Wall Street open after the Standard & Poor's 500 Index and the Dow Jones industrial average ended at record peaks on Wednesday.
Japanese stocks, which earlier inched closer to striking distance of fresh five-year highs, gave up all early gains to ease 0.3 percent.
The Nikkei stock average earlier 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.
MSCI's broadest index of Asia-Pacific shares outside Japan edged up 0.1 percent, after climbing as much as 0.5 percent to its highest since July 2011 earlier in the day.
South Korean shares outperformed their peers, jumping 1.1 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.
"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 failed to sustain gains made after a strong local labour report, which helped pare market bets for an interest rate cut in June, after the Reserve Bank of Australia lowered rates earlier this week.
The data drove the Australian dollar to a session high of $1.0255 from $1.0185 before the data.
Australian shares eased 0.2 percent as data from China, its largest export market, showed annual consumer inflation accelerated slightly more than expected in April while factory prices fell for a 14th consecutive month, highlighting the dilemma facing the central bank as it balances support for the economy against the threat of rising prices.
Stock markets in Hong Kong fell 0.5 percent and Shanghai slipped 0.9 percent, snapping winning streaks.
"We have some profit-taking pressure after the inflation data, which provided a catalyst," said Ben Kwong, chief operating officer at securities house KGI Asia.
CURRENCIES TAKE BACK SEAT
Still, global fund flows into equities were seen remaining intact as global monetary easing depresses returns on bonds while unclear prospects of world economic growth weigh on commodities prices.
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 drew support overnight from 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 euro remained resilient against the dollar, inching up 0.1 percent to $1.3159 but easing 0.2 percent against the yen at 129.91 yen. The dollar fell 0.3 percent against the yen to 98.72 yen.
A senior official at a big Japanese investor noted that the euro's underlying strength may stem from the European Central Bank's conventional policy of cutting interest rates rather than implementing unconventional quantitative easing.
Spot gold was lacklustre, stuck near $1,472.80 an ounce, as bullion was weighed down by continuing outflows from bullion exchange-traded funds which hit their lowest since early 2009.
U.S. crude futures fell 0.2 percent at $96.46 a barrel and Brent steadied around $104.33.