By Aiko Hayashi

TOKYO (Reuters) - Asian stocks edged closer to a 22-month high on Friday, supported by strong U.S. retail sales data, while the yen retreated against major currencies after rising the previous day on talk that China is likely to allow a modest appreciation in the yuan.

The yen was under pressure after news that Prime Minister Yukio Hatoyama will meet with Bank of Japan Governor Masaaki Shirakawa around 0300 GMT to discuss the economy and financial situation.

"An announcement on monetary policy out of this meeting is unlikely, but the event is probably for the government to make an additional request to the Bank of Japan for more easing steps, providing a yen-selling factor," said a trader for a Japanese bank.

The MSCI's broad measure of shares in the Asia-Pacific outside Japan .MIAPJ0000PUS rose 0.33 percent, staying near levels last seen in June 2008 hit on Wednesday and bringing gains since the beginning of the year to more than 4 percent.

Seoul shares slipped 1.3 percent as a strengthening won dented appetite for key exporters such as Hyundai Motor (005380.KS), while reaction to the Bank of Korea's decision to hold its interest rate was limited.

Tokyo's Nikkei average .N225 was flat, with profit-taking after the benchmark's recent rally to 18-month highs offsetting strong earnings guidance from the likes of popular casual clothing chain Fast Retailing (9983.T).

The Nikkei has gained nearly 6 percent so far this year.

Better-than-expected U.S. retail sales data helped support sentiment, but gains are likely to be kept in check ahead of U.S. earnings next week from heavyweights such as Intel Corp (INTC.O) with investors mindful of longer-term uncertainty about the U.S. economic recovery and simmering worries about debt-laden Greece.   Continued...