* Upbeat China PMI adds to share gains, lifts Aussie
* Minutes suggest Fed will keep easy policy for foreseeable future
* Spreadbetters see higher open for European shares
By Shinichi Saoshiro
TOKYO, May 22 (Reuters) - Japanese stocks led a surge in Asian equities to a one-year high on Thursday, after an upbeat reading on China's factory sector burnished risk appetite and blunted some of the more pessimistic views on the world's second-biggest economy.
Spreadbetters expect the momentum to carry over to Europe, with Britain's FTSE seen opening up as much as 0.2 percent, Germany's DAX 0.3 percent and France's CAC 0.2 percent higher.
Equities were already on the front foot after minutes of the U.S. Federal Reserve's last meeting reassured investors that policy makers will continue to support the economy, depressing the safe-haven yen.
That set up the riskier asset markets for a decent uptick when a private survey showed China's factory sector turned in its best performance in five months in May.
MSCI's broadest index of Asia-Pacific shares outside Japan rose as much as 1.1 percent to 488.20, its best level since May last year. It was last up 1 percent.
The Shanghai Composite Index climbed 0.5 percent.
"The data is better than the market had expected," said Zhang Qi, a Shanghai-based analyst with Haitong Securities. "But whether the upward trend can continue depends on whether capital would constantly go to some blue chips."
News suggesting a government-controlled insurer is poised to ramp up investment in domestic equities was the icing on the cake for bullish Japan shares, with the Nikkei surging 2.2 percent.
The Australian dollar, which is sensitive to developments in the economy of its major trading partner China, rose 0.1 percent to $0.9260, pulling away from Wednesday's three-week low of $0.9208.
The price of copper, considered a barometer of global economic health, also edged up on China relief. London copper edged up from a nine-day low hit the session before, also underpinned by signals U.S. rate hikes were not likely in the near-term. Three-month copper on the London Metal Exchange edged up 0.5 percent to $6,868 a tonne.
Medium and long-dated U.S. Treasury yields had climbed overnight, reflecting discussions by the Fed for the eventual tightening of policy though the start of that cycle was seen as being some way off.
The closely-watched minutes of the Fed's April Open Market Committee meeting released on Wednesday showed that policy makers had begun to lay the groundwork for an eventual exit from their easy stance, but that the discussions were "prudent planning" and not a sign rate hikes would come any time soon.
"There was a lot of rejoicing at the Fed minutes; a one line synopsis of the release would read - the Fed continues to champion accommodation for the foreseeable future," Evan Lucas, market strategist at IG in Melbourne, said in a note to clients.
The uptick in risk appetite weighed on the yen and underpinned the dollar somewhat.
The greenback rose 0.4 percent to 101.73 yen, extending its rebound from a 3-1/2 month low of 100.805 yen touched on Wednesday when Bank of Japan Governor Haruhiko Kuroda reiterated his optimistic view on the Japanese economy and provided no hints of further monetary easing in the near term.
The dollar also advanced against the euro, which has been hurt by growing expectations the European Central Bank will ease monetary policy in June and potentially destabilising European Parliament elections later this week.
The euro stood at $1.3675 after hitting a three-month trough of $1.3634 on Wednesday. Traders are now looking at the euro zone purchasing managers surveys due later in the day for some immediate catalysts.
Brent crude steadied near a 2-1/2 month high above $110 a barrel, supported by a large draw in U.S. crude stocks and as the China factory survey suggested better demand from the world's No.2 oil consumer. (Additional reporting by Grace Li in Hong Kong; Editing by Shri Navaratnam)