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GLOBAL MARKETS-Asia shares rise on trade talks hope, firm US data; safe havens sold

Published 06/09/2019, 03:56 pm
Updated 06/09/2019, 04:07 pm
© Reuters.  GLOBAL MARKETS-Asia shares rise on trade talks hope, firm US data; safe havens sold
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* MSCI Asia-Pacific index up 0.4%, Nikkei gains 0.4%

* European stock futures flat to touch lower in early trade

* U.S. jobs report in focus after improvements in risk sentiment

* Safe-haven government bonds, yen on the defensive

By Shinichi Saoshiro

TOKYO, Sept 6 (Reuters) - Asian stocks gained on Friday, joining a global trend as investors took heart from firm U.S. economic data plans hopes a meeting between U.S. and Chinese negotiators next month signals an easing in trade tensions.

The improvement in investors' appetite for risk reduced demand for safe havens such as government bonds and the yen, however.

In early European trade, the pan-region Euro Stoxx 50 futures STXEc1 and German DAX futures FDXc1 were little changed, while Britain's FTSE futures FFIc1 inched down 0.1%.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS added 0.4%, putting it on track for a 2.2% weekly gain - which would make it the best week since mid-June.

The Shanghai Composite Index .SSEC edged up 0.1%. Hong Kong's Hang Seng .HSI was up 0.2%, with some earlier gains trimmed after rating agency Fitch downgraded the city's credit rating following months of unrest. stocks .AXJO gained 0.5%, South Korea's KOSPI .KS11 climbed 0.1% and Japan's Nikkei .N225 advanced 0.4%.

Global equity markets welcomed news that the United States and China agreed on Thursday to hold high-level talks early in October, raising hopes for substantial progress in de-escalating their long, bitter trade conflict. U.S. data on Thursday also helped sentiment.

U.S. private payrolls increased in August at their fastest pace in four months, according to ADP (NASDAQ:ADP) National Employment Report. Separately the U.S. services industry rebounded last month to its fastest expansion since February, according to the Institute for Supply Management's non-manufacturing purchasing managers index (PMI). strong U.S. data are the main part of the latest turn in markets as they are key factors impacting equities and U.S. yields, therefore determining how long this 'risk on' phase will last," said Junichi Ishikawa, senior FX strategist at IG Securities in Tokyo.

On Thursday, the Dow .DJI added 1.4%, the S&P 500 .SPX climbed 1.3% and Nasdaq .IXIC rose 1.75%.

Ishikawa at IG Securities said a U.S. August jobs report ou later in the global day "will get more attention than usual as it could further fuel the risk-on phase, which in turn would boost the dollar."

The non-farm payroll report is expected to show an increase of 158,000 and the unemployment rate holding steady at 3.7%. dollar stood at 107.000 yen JPY= after climbing to a one-month high of 107.235 overnight. The greenback has gained about 0.7% against the safe-haven yen.

The pound GBP=D3 hovered near a six-week peak of $1.2353 scaled the previous day on hopes that Britain could avoid exiting the European Union without a deal.

Sterling had fallen to a three-year low of $1.1959 midweek after British Prime Minister Boris Johnson stoked fears of a no-deal Brexit.

The euro was steady at $1.1039 EUR= after rising 0.5% overnight, when it was lifted by sterling's bounce.

The dollar index against a basket of six major currencies .DXY was little changed at 98.369 after pulling back from a one-week low of 98.085 the previous day, thanks to a rise in U.S. Treasury yields.

U.S. Treasuries fell in price and their yields rebounded from multi-year lows as investors moved out of safety assets into equities. US/

The 10-year Treasury yield US10YT=RR was at 1.536%, having risen from a three-year trough of 1.428% plumbed midweek as soft economic data and Sino-U.S. trade worries stoked global recession concerns.

"The recent panic in markets was excessive. And if a sustained reversal of fragile sentiment gets under way, U.S. equities will test fresh record highs and a corresponding drop in bond prices will present an good bargain hunting opportunity," said Eiichiro Tani, chief strategist at Daiwa Securities.

Japan's 10-year government bond yield JP10YTN=JBTC climbed 2.5 basis points to minus 0.250%, putting some distance between a three-year low of minus 0.295% set earlier this week.

The Australian dollar AUD=D4 traded close to a one-month peak of $0.6830. It has gained more than 1% this week amid the thaw in U.S.-China trade tensions and tempered prospects for an immediate interest rate cut by the Reserve Bank of Australia.

Brent crude oil futures LCOc1 were little changed at $60.97 per barrel, losing some steam after posting strong gains over the past two sessions.

Brent had climbed to a one-month peak of $62.40 per barrel on Thursday on a decline in U.S. crude inventories and eased trade war worries.

(Editing by Simon Cameron-Moore)

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