'Which' would be the correct word, but 'it' would work if you started it as a new sentence. "My friend showed me around the town. It was very nice of him."

You'll find more and more "suitable" answers in English. My English teachers always told me, "there is often more than one right answer. Pick the better answer." "Which" is a better answer because the sentence doesn't lose its flow. The problem with "it" is that the sentence lacks a coordinating conjunction or a semicolon. "My friend showed me 'round the town; it was very kind of him" allows for "it" because of the semicolon. The semicolon, in this sentence, takes the place of "and." "My friend showed me 'round the town, and it was very kind of him."