GLOBAL MARKETS-Shares ease, wary before China, U.S. data


TOKYO: Asian shares eased on Friday, with China's factory activity data and a U.S. jobs report due later in the session making investors cautious as the escalating euro zone debt crisis threatened to further undermine growth worldwide.

MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.1 percent. It ended May with a 10.9 percent slide, its worst monthly performance in eight months.

Japan's Nikkei opened down 0.9 percent after registering its biggest monthly drop in two years in May.

World stocks also had their largest loss in eight months in May while European shares recorded their worst monthly loss since last August. U.S. shares cut some of Thursday's losses on a report, later denied, of possible International Monetary Fund aid to bail out Spanish banks.

Spanish banking and Greece's fate with the euro bloc were the main focus. But reports showing private employers created fewer jobs than expected and a rise in new unemployment benefit claims raised concerns about the pace of the U.S. recovery.

Economists expected U.S. nonfarm payrolls, due on Friday, to rise by 150,000 jobs in May, up from 115,000 in April, while the unemployment rate likely held steady at 8.1 percent.

A possible further drag on investor risk appetite is China's official Purchasing Managers Index (PMI), due at 0100 GMT. The index likely eased in May, reflecting a slowing pace of output.

The preliminary reading of HSBC's China Manufacturing PMI showed smaller private-sector firms were already struggling, and the final index level for May was due at 0230 GMT.

"Given the heightened uncertainty about the outlook for Europe and the global economy, we recommend staying defensive in FX markets," Barclays Capital analysts said in a note. They suggested positioning for a weaker euro but also trading risky currencies "tactically based on region-specific developments".

As further evidence of global deterioration, data on Thursday showed India's annual economic growth slumped in January-March to a nine-year low of 5.3 percent.

The euro remained pressured, down 0.1 percent at $1.2357 on Friday, and hovering near its 23-month low against the dollar of $1.23363 hit on Thursday. The euro fell to an 11-1/2-year low against the yen at 96.48 on Thursday.

The yen eased against the dollar to 78.50 yen on Friday after rising to a 3-1/2 month high of 78.21 yen the day before on strong bids for safety.

The flight to safety lifted the dollar index, measured against a basket of major currencies, to a 21-month high of 83.215 on Thursday, helping to push the Thomson Reuters-Jefferies CRB index, a global benchmark for commodities, to its lowest level since September 2010 on Thursday.

U.S. benchmark 10-year Treasury yields on Thursday fell as low as 1.53 percent - the lowest on record going back more than two centuries, according to Reuters data.

The cost of insuring against a Spanish default hit 600 basis points for the first time on Thursday and the country's 10-year debt yield remained at well above 6 percent.

Asian credit markets were subdued early on Friday, with the spread on the iTraxx Asia ex-Japan investment-grade index barely changed.

U.S. crude was steady around $86.55 a barrel on Friday after settling at the lowest close since Oct. 20. With a 17.5 percent loss for May, U.S. crude futures marked their biggest monthly decline since December 2008.

Brent crude futures eased 0.2 percent at $101.66 on Friday after settling at its lowest finish since early October. - Reuters

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