* Weaker-than-expected jobs report gives Fed less reason to
* BOJ Kuroda underscores bank's willingness to ease further
* Oil gives back some of Friday's gains, after marking
By Lisa Twaronite
TOKYO, Sept 5 Asian shares rallied on Monday
after last week's weaker-than-expected U.S. jobs report prompted
investors to trim expectations that the Federal Reserve would
hike interest rates as early as this month.
MSCI's broadest index of Asia-Pacific shares outside Japan
extended early gains and was up 1.5 percent in
Financial spreadbetters predicted the buoyant mood would
extend into European markets, which caught a lift on Friday
afternoon when the U.S. jobs report was released early in the
"The unemployment report was not weak enough to completely
undermine the Fed's hawkish bias since Jackson Hole. It was
probably enough to see fence-sitters on the Federal Open Market
Committee wait until December before voting to hike interest
rates," wrote analyst Jasper Lawler at CMC Markets, which
expected Britain's FTSE, Germany's DAX and
France's CAC to open higher.
Japan's Nikkei stock index rose 0.7 percent to its
highest close since May 31. But it ended off session highs in
choppy trading as the dollar slipped against the yen despite
Bank of Japan Governor Haruhiko Kuroda's signal that the BOJ
stands ready to ease monetary policy further.
"One positive for the market is that the correlation between
the Nikkei and the yen appears to be breaking down," said Gavin
Parry, managing director at Parry International Trading Ltd.
"For the short-term, you have to be long Japan," he said.
U.S. stock futures edged up 0.2 percent, though cash
stock and bond markets will be closed on Monday for Labor Day.
Friday's U.S. jobs report showed nonfarm payrolls rose by
151,000 jobs in August after an upwardly revised 275,000
increase in July. Economists polled by Reuters had expected a
rise of 180,000.
"What matters is not whether the markets think that was a
strong jobs number, but whether Fed policymakers do," said
Mitsuo Imaizumi, chief currency strategist at Daiwa Securities
in Tokyo, who noted that Fed Vice Chairman Stanley Fischer said
late last month that the U.S. job market was close to full
Richmond Federal Reserve Bank President Jeffrey Lacker said
on Friday that the U.S. economy appears strong enough to warrant
significantly higher interest rates.
U.S. Fed Funds futures prices indicated investors were
pricing in around a 20 percent chance of a September hike, and
more than a 60 percent chance by the end of year.
BNY Mellon senior global markets strategist Marvin Loh
expects the Fed to hold off on any rate hikes until December,
when they can factor in three additional jobs reports as well as
the U.S. third-quarter growth report.
"We will add that we have been fooled by the FOMC on
September moves in prior years and vow not to fall into that
same trap again," Loh wrote.
Markets were also keeping watch on the two-day summit of
leaders from G20 nations, in Hangzhou, China.
Chinese President Xi Jinping said at the open of the summit
on Sunday that global economy was being threatened by rising
protectionism and risks from highly leveraged financial markets.
The dollar fell 0.5 percent to 103.44 yen, giving
back some of its gains after rising as high as 104.32 on Friday,
its highest since July 29.
The BOJ's Kuroda told a seminar on Monday that the central
bank's comprehensive review of its policies later this month
would not lead to a suspension of easing.
He shrugged off growing market concerns that the bank is
reaching its limits and stressed that the BOJ had room to deepen
negative rates even as he acknowledged that policy had its own
"There is no free lunch for any policy. That said, we should
not hesitate to go ahead with (additional easing) as long as it
is necessary for Japan's economy as a whole," Kuroda said.
The euro rose 0.2 percent to $1.1178 ahead of
Thursday's European Central Bank interest rate decision.
Most economists expect the central bank to hold policy
steady, though some believe the ECB could extend its asset
The Reserve Bank of Australia will also issue a policy
decision on Tuesday. All 33 economists polled by Reuters
expected a steady outcome, with financial markets pricing in the
smallest of chances for a cut <0#YIB:>.
Crude prices inched down, paring their robust gains in the
previous session amid worries over a global oil glut.
Brent crude was down 0.1 percent at $46.79 a barrel,
while U.S. crude slipped 0.2 percent to $44.35.
Both had gained 3 percent in the previous session as the
dollar slipped after the employment data, making oil cheaper for
investors holding other currencies.
But for the week, Brent fell 6 percent, its biggest drop in
five weeks, while U.S. crude fell nearly 7 percent to mark its
largest decline in eight weeks.
(Reporting by Lisa Twaronite; Editing by Kim Coghill and Eric