Japanese, Australian shares hit record highs on Wall Street bounce

SYDNEY, March 1 (Reuters) -- Japanese and Australian shares hit fresh record highs on Friday as a key U.S. inflation reading came in as expected, a relief for investors that had looked for a June rate cut, while mixed data from China bolstered hopes for more policy support.

Europe is set to open higher, with Euro Stoxx 50 futures up 0.5% and FTSE futures gaining 0.6%. The U.S. futures NQc1 and ESc1 gained about 0.2%.

The Nikkei index jumped 1.9% to hit a fresh all-time high, extending a surge of 7.9% in the previous month, when it breached levels last seen in 1989. Australia's resources-heavy shares rose 0.6% to a new record high.

MSCI's broadest index of Asia-Pacific shares outside Japan also gained 0.2%, although it was still set for a weekly loss of 0.4%.

Data on Friday showed China's factory activity contracted for a fifth straight month in February, while the expansion in the services sector picked up pace, highlighting an uneven recovery for the world's second-largest economy.

That fed hopes of more policy support from Chinese policymakers at the annual parliament meeting next week, where Beijing is set to unveil economic targets for the new year. 

"Although the [activity] survey readings remain below historical averages, this is likely distorted by sentiment effects," said analysts at Capital Economics.

"We expect a modest recovery in China's growth momentum thanks to policy support, although this rebound appears fragile and may not last once policy support is scaled back."

China's mainland markets were higher. The blue-chip CSI 300 rose 0.4% and the Shanghai Composite index edged up 0.2%, after rebounding nearly 10% last month on the back of Beijing's efforts to stop short-selling in the market.

Hong Kong's Hang Seng