* MSCI Asia ex-Japan +1.8%, Nikkei +1.3%

* European shares set to follow Asia's lead

* Equities rally after China cuts loan prime rate

* Global equities set for 7th weekly loss

SHANGHAI, May 20 (Reuters) - Asian shares jumped on Friday after China cut a key lending benchmark to support a slowing economy, but a gauge of global equities remained set for its longest weekly losing streak on record amid investor worries about sluggish growth.

China cut its five-year loan prime rate (LPR) by 15 basis points on Friday morning, a sharper cut than had been expected, as authorities seek to cushion an economic slowdown by reviving the housing sector. The five-year rate influences the pricing of mortgages.

MSCI's broadest index of Asia-Pacific shares outside Japan quickly built on early gains after the cut and was last up more than 1.8%.

European equities were set to follow Asia's lead, with pan-region Euro Stoxx 50 futures, German DAX futures and FTSE futures all up more than 1%.

Chinese blue-chips also rose 1.8%, boosted by foreign buying, and Hong Kong's Hang Seng index jumped more than 2%, while Australian shares rose 1.1%. In Tokyo, the Nikkei stock index gained 1.3%.

"While it certainly will not suffice to reverse growth headwinds in Q2, (the cut) constitutes a move in the right direction so markets might be reacting to expectations of stronger easing going forward," said Carlos Casanova, senior Asia economist at Union Bancaire Privee in Hong Kong.

Despite the gains in Asian shares, MSCI's All-Country World Price Index remained headed for its seventh straight week in the red, the longest such stretch since its inception in 2001. It would also be the longest including back-tested data extending to January 1988.

Concerns over the impact of battered supply chains on inflation and growth have prompted investors to dump shares, with Cisco Systems Inc on Thursday tumbling to an 18-month low after it warned of persistent component shortages, citing the impact of China's COVID lockdowns.

On Friday, China's financial hub of Shanghai bruised residents' hopes for a smooth end to restrictions as it announced three new COVID-19 cases outside of quarantined areas - though plans to end a prolonged city-wide lockdown on June 1 appeared to remain on track.

Industrial output in the city shrank more than 60% in April from a year earlier due to the impact of coronavirus restrictions.

"The focus of (Chinese) officials has been to come up with easing policies to mitigate the impact of COVID suppression ... The problem is that such easing policies will not have any real impact so long as the COVID suppression policy is tightly enforced," said Christopher Wood, global head of equities at Jefferies.

The gains in Asia came after a late rally on Wall Street petered out, leaving the Dow Jones Industrial Average down 0.75%, the S&P 500 0.58% lower and the Nasdaq Composite off by 0.26%.

STRONGER YUAN

In the currency market, the dollar index retreated from small earlier gains to nudge down 0.12% to 102.79, heading for its first losing week in seven.

Moves elsewhere were muted, with the dollar just on the stronger side of flat against the safe-haven yen at 127.76. The euro was barely higher at $1.0586, erasing earlier losses.

China's onshore yuan logged bigger moves, turning around from a 0.32% dip to strengthen to a two-week high of 6.6699 per dollar. The more freely traded offshore yuan also hit a two-week high at 6.6855 per dollar.

While longer-dated U.S. government bond yields ticked higher following China's LPR cut, mirroring gains in equities, they later moderated.

The U.S. 10-year yield was last at 2.855%, flat from Thursday's close, and down from a top of 2.922% earlier on Friday. The two-year yield climbed to 2.6327% compared with a U.S. close of 2.611%.

Crude prices pared losses after China's LPR announcement but later extended falls on worries a demand recovery could falter.

Brent crude was last down 0.53% at $111.45 per barrel and U.S. West Texas Intermediate crude was 1.21% lower at $110.85 per barrel.

Gold bounced higher and was set for its first weekly gain since mid-April, helped by the weaker dollar. Spot gold, rose 0.26% to $1,846.49 per ounce.

(Reporting by Andrew Galbraith; Editing by Lincoln Feast and Sam Holmes)