Japan leads Asian shares higher, dollar gains after US payrolls blowouts

By Kevin Buckland

TOKYO (Reuters) – Asian shares rose and the dollar hit a fresh seven-week high against the yen on Monday after a burst of U.S. jobs data dispelled recession fears and spurred a sharp cut in cuts interest.

Short-term U.S. Treasury yields rose after Friday’s closely watched nonfarm payrolls report showed the economy unexpectedly added the most jobs in six months in September.

Crude oil prices fell from a one-month peak even as Israel bombed targets in Lebanon and the Gaza Strip, Monday marking one year since the Hamas attack that sparked the war.

Japan’s Nikkei led regional share gains, up 2 percent as of 0015 GMT, given an additional boost by the weaker yen.

Australia’s stock index rose 0.12 percent and South Korea’s Kospi gained 0.29 percent.

Hong Kong’s Hang Seng has yet to open, and mainland Chinese stocks remain closed until Tuesday for the Golden Week holiday.

MSCI’s broadest index of Asia-Pacific shares rose 0.4 percent.

US Dow futures were 0.08% higher after the cash index closed at an all-time high following Friday’s payrolls data.

“The market’s reaction shows what the key themes and risks are for market participants today: economic growth and its impact — for stocks — on future earnings,” said Kyle Rodda, senior financial market analyst at Capital.com.

“There also appears to be a resurgence of trade with US economic exceptionalism.”

The US dollar rose as high as 149.10 yen for the first time since Aug. 16, before last trading up 0.18 percent to 148.87 yen.

Japan’s top currency diplomat, Atsushi Mimura, said on Monday that officials would monitor currency movements, including speculative trading.

The euro fell 0.07 percent to $1.0971, sliding back toward Friday’s seven-week low of $1.09515.

Bets on a whopping 50 basis point rate cut at the Federal Reserve’s next policy announcement on November 7 – which had been above 50% a week ago – were all but wiped out after the wages report.

Instead, traders are now 95% betting on a quarter-point cut, with little chance of the policy rate being left unchanged, according to CME Group’s FedWatch tool.

The two-year U.S. Treasury yield rose 1.7 basis points to 3.9488 percent on Monday, the highest in more than a month.

Gold fell 0.1 percent to $2,849.29 an ounce, but remained not far from last month’s record peak of $2,685.42.

Crude oil prices fell after their biggest weekly gains in more than a year amid the growing threat of a regional war in the Middle East.

Brent crude futures lost 65 cents to $77.40 a barrel, while U.S. West Texas Intermediate crude futures fell 53 cents to $73.85 a barrel.

(Reporting by Kevin Buckland; Editing by Jamie Freed)