* Dollar underpinned by rising yields as Fed hike looms
* Expectations of strong U.S. payrolls after blockbuster ADP
* Oil tries to regain footing after nasty spill, gold at
* Asia shares mostly softer, led by falls in energy stocks
By Wayne Cole
SYDNEY, March 9 The dollar stood firm in Asia on
Thursday and bond yields spiked after super-strong U.S. jobs
data made a rate hike a near certainty, while oil struggled to
find its footing after U.S. stockpiles swelled past all
With energy stocks on the run, MSCI's broadest index of
Asia-Pacific shares outside Japan slipped 0.9
percent. Australia's main index eased 0.4 percent, while
its resource sector fell more than 2 percent.
Spread betters pointed to opening losses for European
bourses, while the E-mini contract for the S&P 500 dipped
a slim 0.03 percent.
Bucking the trend, Japan's export-heavy Nikkei
managed to take heart from a softer yen and added 0.3 percent.
Economic data out of China continued to surprise with
consumer inflation coming in well under expectations at an
annual 0.8 percent, largely due to falling food prices.
Yet producer prices still rose at the fastest pace since
2008, keeping alive hopes that China had stopped exporting
disinflation to the rest of the world.
That inflationary pulse was timely given oil prices dived 5
percent on Wednesday to the lowest this year as U.S. crude
inventories ballooned to a record.
The market did pare a little of the losses on Thursday with
U.S. crude up 30 cents at $50.58, while Brent crude
bounced 43 cents to $53.54 a barrel.
Wall Street had been sideswiped by the retreat in oil, with
energy stocks losing 2.5 percent in their worst
performance since mid-September.
The Dow fell 0.33 percent, while the S&P 500
lost 0.23 percent and the Nasdaq added 0.06 percent.
Interest rate-sensitive real estate stocks also
took a hit after the ADP employment report showed private
payrolls surged by 298,000 last month, far above expectations.
NO STOPPING THEM
Tom Porcelli, chief U.S. economist at RBC Capital Markets,
said the report was so strong it meant the payrolls report on
Friday would have to be unbelievably dire to deter the Fed from
hiking next week.
"There is almost no number that would stop them," said
Porcelli. "It would take an extreme event for the Fed to take a
pass at this point."
Indeed, he noted the ADP surprise meant there was a real
chance payrolls could beat expectations, perhaps by a lot.
"On the face of it, ADP is consistent with private payrolls
of about 340,000," he said. The current median forecast is for a
rise of 190,000.
With a hike seemingly certain, and more likely over the
year, yields on two-year Treasury notes climbed to
1.378 percent, the highest since August 2009.
That widened its premium over German debt to a meaty 220
basis points, the largest gap since early 2000. That is a burden
for the euro that is likely to only get heavier as the European
Central Bank seems wedded to its super-easy policy.
The central bank meets later Thursday and is considered
unlikely to tighten until the latter part of this year or early
2018, a Reuters poll found last week.
The single currency was stuck at $1.0530 in Asia on
Thursday, well off a $1.0640 top hit early in the week.
The dollar index was last up 0.1 percent at 102.210,
and close to a March 2 peak of 102.26. The dollar also edged up
to 114.50 yen, having been as high as 114.75.
The firmer dollar pressured a host of commodities from iron
ore to copper, which touched a seven-week trough.
Spot gold was nursing a grudge at $1,204.90 having
struck a five-week low as higher interest rates raised the
opportunity cost of holding the non-yielding metal.
(Editing by Jacqueline Wong)