* Euro zone growth lifts spirits, Italy PM switch gets thumbs-up
* Nikkei bucks trend and tumbles as yen rises
* Dollar at 3-week low vs euro, Wall Street seen steady
* Gold shines at $1,317 per ounce
By Marc Jones
LONDON, Feb 14 Signs of a gradual acceleration in euro zone growth put the region's shares on course for their best week of the year on Friday and pushed the euro to a three-week high.
Encouraging economic data helped take some of the sting out of disappointing retail and jobless figures in the U.S. on Thursday. Investors also gave a cautious thumbs up to political changes in Italy.
Stocks in Milan were Europe's best performers, rising 1.7 percent, compared with a 0.4 percent gain for the pan-European FTSEurofirst 300 index. In the debt market, Italian borrowing costs hovered near eight-year lows.
Italy's centre-left leader, Matteo Renzi, forced out Prime Minister Enrico Letta on Thursday after Letta failed to pass major reforms. The new government will be Italy's third in a year, but the hope is Renzi can revive efforts to streamline the euro zone's third-largest economy.
"This is not political uncertainty," said BNP Paribas rate strategist Patrick Jacq. "In fact, the political situation in Italy now is clearer."
In the currency market, the euro rose back to a three-week high of 1.3712 it had hit earlier in Asia. Euro zone growth and the events in Italy helped its cause. So did a weakening dollar after Thursday's lacklustre data.
The signs of growth came from fourth-quarter gross domestic product reports in Germany and France, both of which exceeded expectations. That meant euro zone GDP growth as a whole also beat forecasts - 0.3 percent versus a projected 0.2 percent. That reduced the pressure on the European Central Bank to cut interest rates at its next meeting.
"It's a positive and it takes the pressure off the ECB a bit to ease next month, but they are still left with a few problems," said Deutsche Bank euro zone economist Gilles Moec. "... Inflation and credit still continue to be problematic so it is not the end of the debate."
Futures prices signalled a steady end to the week for Wall Street. Data from both the U.S. and China have been unconvincing recently, but they have been offset by assurances from the Federal Reserve, European Central Bank and Bank of England that they will maintain accommodative monetary policies.
In Asian trading, share markets mostly rose to give MSCI's broadest index of Asia-Pacific shares outside Japan its biggest weekly gain since September.
Japan's Nikkei stock average underperformed its counterparts, tumbling 1.5 percent for its sixth straight weekly loss as the yen continued to gain ground against the dollar.
The weaker dollar helped Asian emerging-market currencies gain for the week. The Indonesian rupiah was near a 11-week high after a report showed the country's current account deficit narrowed in the fourth quarter.
The yield on benchmark 10-year Treasury notes dipped after Thursday's data but climbed back to just under 2.74 percent in European trade, pulling benchmark European German Bund yields up with it.
U.S. yields rallied this week after the U.S. Congress approved an increase in the debt limit and incoming Federal Reserve Chair Janet Yellen maintained the central bank's commitment to gradually withdraw its stimulus.
In commodities, U.S. crude slipped about 0.3 percent to $100.02 a barrel after skidding on the weak U.S. data. Brent crude edged down about 0.1 percent to $108.32.
Gold advanced, along with other valuable metals like silver and platinum. Friday's latest rise put gold at $1,317 per ounce, up almost 4 percent for the week.
Investor sentiment seems to have improved. SPDR Gold Trust GLD, the world's largest gold-backed exchange-traded fund, posting its biggest inflow since late December, up 7.5 tonnes to 806.35 tonnes on Thursday.