Asian stocks pause after rallying on Fed TOKYO (Reuters) - The broad asset rally which the U.S. Federal Reserve inspired by pledging to keep rates low decelerated on Friday as investors awaited the outcome of Greek debt talks and U.S. gross domestic product data. MSCI's broadest index of Asia-Pacific shares outside Japan, which rose 1.1 percent on Thursday, climbed another 0.5 percent early Friday to reach its highest level in nearly three months before slipping to be up only 0.1 percent. The index, on track for its fourth consecutive weekly increase, was set to gain about 2 percent this week. Financial spreadbetters expected Britain's FTSE 100 .FTSE, Germany's DAX .GDAXI and France's CAC-40 .FCHI to open down around 0.5-0.6 percent. Commodities softened after jumping on Thursday along with all other asset classes, as the Fed said it would keep interest rates near zero through at least 2014, and left the door open for a third round of quantitative easing to spur growth. Copper was down 0.6 percent at $8,540, slipping from a four-month high but on track for their third straight week of gains, while gold at $1,717 was off a 7-week high near $1,730 reached on Thursday but headed for fourth weekly gains. Oil firmed on hopes for U.S. recovery. "Beyond the Fed, investors want to lock in profits after a recent run-up, while there's also caution before the resolution to the Greek debt talks and the first reading of U.S. fourth-quarter GDP," said Ong Yiling, a commodities analyst at Phillip Futures in Singapore. The Nikkei stock average ended down 0.1 percent. .T Emerging market equities: link.reuters.com/weh36s Euro zone bond spread: link.reuters.com/mac36s U.S. money funds: link.reuters.com/zaj36s "We are positive on risky assets, with the Fed, as well as other major central banks, willing to provide support through their policy actions," analysts at Barclays Capital said. But they said while the euro may have further upside in the near term, its likely path to the downside remained. The dollar index .DXY recovered from a seven-week low while the euro steadied around $1.3100, off a five-week high against the dollar of $1.3184 hit the day before. The U.S. GDP data due later on Friday was expected to show the economy likely grew at its fastest pace in nearly two years at the end of 2011. A 3 percent annual growth in the fourth quarter as forecast could bolster risk-positive sentiment, coming on the heels of data on Thursday showing new orders for manufactured goods rising in December and a gauge of future business investment rebounding. The European Central Bank's aggressive funding has driven down bond yields of indebted euro zone countries, with Italian 10-year yields falling below 6 percent for the first time in six weeks on Thursday, encouraged by strong short-term debt sales and the Fed-inspired positive momentum in markets generally. Thanks to some degree of stability returning to Europe, U.S. money funds, while remaining cautious about lending to banks in the troubled euro zone, showed signs of returning to the region. Commercial paper loans to the foreign banks increased in the latest week -- its third consecutive weekly gains -- and reached the highest level since June. But Portuguese five- and 10-year government bond yields rose to euro-era highs on worries that the country may follow in Greece's footsteps and need a second bailout. "The ability of this rally to extend is likely to depend on the view on Europe," wrote National Australia Bank in a note to clients. The CBOE Volatility index VIX .VIX slumped to its lowest in nearly seven months below 17 before rebounding to near 19 on Thursday, serving as a warning against excessive optimism. The index measures expected volatility in the S&P 500 over the next 30 days and mirrors investors' desire to seek protection in stock index options against future losses. Greece and its private creditors made progress on Thursday in talks on restructuring its debt, both sides said, and they will continue negotiating on Friday with the aim of sealing an agreement within a few days. Greek media reported that private creditors were willing to lower their "final offer" of a 4 percent interest rate on new Greek bonds in order to clinch a deal. The Asian credit markets were firmer, with spreads on the iTraxx Asia ex-Japan investment grade index narrowing marginally by 2 basis points. Additional reporting by Jane Lee in Kuala Lumpur, Cecile Lefort in Sydney and Reuters FX analyst Krishna Kumar; Editing by Richard Borsuk