The immediate outlook was clouded by a momentum-driven fall on Wall
Street and a rise in the yen against the dollar, which knocked the
Nikkei <.N225> down 1.5 percent.
Australia also took a 0.4 percent dip >.AXJO> but other markets in
the region were faring better and MSCI's broadest index of
Asia-Pacific shares outside Japan <.MIAPJ0000PUS> was holding
The euro had its own troubles as speculation of further easing from
the European Central Bank pulled EU bond yields down to multi-year
lows. Some Spanish yields even dropped below those in the United
States for the first time since 2007.
Profit-taking on high-flying momentum stocks had hit the Nasdaq hard
on Friday and dragged the Dow and S&P off historic highs. The Nasdaq
shed 2.6 percent <.IXIC> in its biggest daily loss since February,
while the <.DJI> fell 0.96 percent and the S&P 500 <.SPX> 1.25
Still, the fall was more a function of positioning than any weakness
in the jobs report.
Nonfarm payrolls rose by 192,000, while upward revisions over the
prior two months totaled 37,000. The unemployment rate was unchanged
at 6.7 percent, while hours worked rebounded and another soft
reading on wages was benign for inflation.
"The conclusion then is that employment conditions are pretty much
the same as they have been last few years," said Michelle Girard,
chief economist at RBS in Stamford, Connecticut.
"This report should not move the dial in either direction for either
the market or the Fed."
That was just fine for emerging markets which have been vulnerable
to any hint the Fed might unwind its stimulus at a faster pace, and
so attract foreign funds away.
Emerging market stocks <.MSCIEF> ended Friday 0.2 percent firmer for
a third straight week of gains.
Also relieved was the U.S. Treasury market where 10-year yields
dived almost 9 basis points to 2.72 percent as prices rallied
The pullback undermined the U.S. dollar's advantage over the yen and
pulled it back to 103.27 from Friday's 10-week peak at 104.13 yen.
[to top of second column]
ECB UNDER PRESSURE
The euro fared even worse after a German newspaper reported the ECB
had modeled the impact of buying a trillion euros of assets to ward
off deflation, a day after the ECB's president said radical policy
action might be needed.
"No longer is it the case that the data need to weaken further;
rather, with the latest inflation data already tracking below the
staff's baseline projections, it will suffice that there is no
‘catch-up' over the next few weeks," said James Ashley, chief
European economist at RBCCM.
"In other words, if the data do not improve as expected, the ECB
Just the chance of extra action has pushed bond yields down sharply
across Europe, with Spanish five-year yields dropping below U.S.
Treasuries for the first time since 2007.
That in turn undermined the euro, which was pinned at $1.3699 on
Monday having carved out a five-week trough of $1.3671 on Friday.
That helped nudge up the dollar against a basket of currencies to
There is little in the way of major economic data in Asia on Monday,
but the Bank of Japan has a policy meeting ending on Tuesday that
will be closely watched for any hint that policymakers are
considering adding to their already massive asset buying.
In commodity markets, gold was holding at $1,302.64 an ounce after
bouncing 1.2 percent on Friday.
Oil prices eased after Libyan rebels occupying four eastern oil
ports agreed with the government on Sunday to gradually end their
eight-month petroleum blockade.
Brent crude was quoted 55 cents lower at $106.17 a barrel on Monday,
while U.S. crude eased 14 cents to $101.00 a barrel.
Markets in China are closed for a public holiday.
(Editing by Eric Meijer)
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