Asian shares advance after US jobs, ISM

TOKYO (Reuters): Asian shares climbed to 18-month highs on Monday after US data showed some promise of a credible recovery but not strong enough to threaten the Federal Reserve’s easing plans, while momentum also gained on firmer manufacturing data from Europe and China.

The yen took a break from heavy selling against the US dollar and the euro, but fell to its lowest since August 2008 against the Australian and New Zealand dollars early on Monday on confidence of bold monetary support from the Bank of Japan to overcome the country’s stubborn deflation.

More confidence in global economic recovery underpinned oil and copper prices while weighing on safe-haven assets, pushing 10-year US Treasury yields to a nine-month high and 10-year Japanese government bond yields to a three-week high.

European markets are likely to inch higher, with financial spreadbetters predicting London’s FTSE 100, Paris’s CAC-40 and Frankfurt’s DAX would open up by around 0.1%. US stock futures were little changed, pointing to a steady open on Wall Street. The MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.6%.

“Prices of risk assets are generally expected to face upward pressures,” said Naohiro Niimura, a partner at research and consulting firm Market Risk Advisory. “While risk appetite is returning, prices may become top-heavy for some commodities markets where the relative strength index suggests an overbought territory under the current economic environment.”

Brent crude eased 0.2% to $ 116.48 a barrel but held above $ 116, near a more than four-month high, as data from top consumers United States and China reinforced a view that the global economy was headed for a modest uptick this year.

“We are now seeing a consistent story of moderate growth in the US and China, which is supportive of oil prices in general,” said Ric Spooner, chief market analyst at CMC Markets in Sydney. “This will probably be a week of consolidation.”

US data out on Friday showed payrolls rose modestly last month, with upward revisions for November and December, while the Institute for Supply Management said its index of national factory activity rose to its highest since April. China followed with positive news over the weekend, saying growth in its official purchasing managers’ index (PMI) for the non-manufacturing sector ticked up in January for the fourth straight monthly rise, confirming the world’s second-largest economy was showing a modest recovery. Australian shares, however, lost their grip on early gains to end 0.3% lower, pulled down by weaker-than-expected housing data, slow job advertising and technical resistance. They jumped 0.9% to a 21-month high on Friday.