GLOBAL MARKETS-Asian shares hit 2-week low on Fed taper fears after jobs data
* China CSI300 falls 2.2 pct, Beijing signals to cut off credit
* Dollar hits 6-wk high vs yen, euro hovers near 7-wk low vs dollar
* Ten-yr Treasury yield turns lower after hitting highest in 2 yrs
* European shares expected to open higher
By Dominic Lau
TOKYO, July 8 (Reuters) - Asian shares tumbled on Monday as strong U.S. jobs growth increased the chances of the Federal Reserve rolling back its stimulus in coming months, sending the dollar to a three-year high against a basket of major currencies.
Chinese stocks and regional sentiment were hurt by Beijing's plan to choke off credit to force consolidation in industries plagued by overcapacity as it seeks to end the economy's reliance on investment funded by cheap debt.
European shares were expected to open higher, however, with Britain's FTSE 100 seen trading up as much as 1 percent and Germany's DAX up as much as 0.7 percent, according to spreadbetters.
U.S. employers added 195,000 new jobs to their payrolls last month, beating expectations of 165,000. Adding to the positive sentiment, the figures for April and May were revised up by a combined 70,000. The unemployment rate held steady at 7.6 percent as more people entered the workforce.
Friday's sharp selloff in U.S. Treasuries - with the 10-year yield suffering its biggest one-day rise in nearly two years, Reuters data showed - accelerated losses that started in May over the uncertainty of the Fed's $85 billion a month bond-buying programme.
Yields on 10-year U.S. Treasuries, which move opposite to price, were at 2.6924 percent, turning lower after climbing to a nearly two-year high of 2.755 percent in Asian trade. They jumped 23.3 basis points to 2.736 percent on Friday, driving up U.S. dollar borrowing costs.
"The money in the market is very short term right now. Most investors have given up hope for any stimulus from Beijing, but now it seems they could be rolling out stricter ground rules to aid the restructuring of the economy," said Jackson Wong, vice-president for equity sales at Tanrich Securities in Hong Kong.
Shares in MSCI's Asia-Pacific ex-Japan index shed 1.8 percent to a two-week low, while Chinese equities lost 2.2 percent and Hong Kong's Hang Seng Index dropped 2.1 percent.
China's resolve to overhaul its economy for long-term improvement will be tested this month if a slew of data shows growth is grinding towards a 23-year low, as expected.
The median forecast of 21 economists surveyed by Reuters show China's economy likely expanded 7.5 percent in April-June from a year ago, slowing from the previous three months as weak demand dented factory output and investment growth.
The CSI300 index has lost nearly 14 percent so far this year, while the MSCI Asian gauge is down 10 percent.
The weakness in Chinese markets dragged Tokyo's Nikkei average down 1.4 percent. Earlier, the Japanese benchmark climbed as much as 1.3 percent to a six-week high.
"I don't think it's negative for Japan," said a hedge fund manager, who declined to be identified, referring to higher dollar borrowing costs.
"For ASEAN countries, it is more of a concern if rates continue to go up. A lot of the funding for some of these countries is dollar-denominated."
The selloff in Treasuries also hurt Japanese government bonds on Monday, with the 10-year yield up 2.5 basis points to 0.880 percent.
The dollar hit a six-week high of 101.54 yen after gaining 1.2 percent on Friday, its biggest one-day rise in a month.
"The dollar looks likely to gain further. But then again, if Chinese shares face more pressures, we could see a bigger dip in the dollar/yen," said Koichi Takamatsu, forex manager at Nomura Securities in Tokyo.
Against a basket of major currencies, the dollar advanced 1.6 percent to a three-year high.
The euro dipped 0.1 percent to $1.2820, not far off a seven-week low of $1.2806. It dropped 1.4 percent versus the dollar in the previous two sessions on the U.S. jobs data and the European Central Bank's dovish policy guidance.
Brent crude prices added 0.3 percent to $108 a barrel, extending Friday's 2.1 percent rise on the strong U.S. data and concerns over Egypt's unrest increasing instability in the Middle East.
Copper prices eased 0.2 percent to stay below $6,800 a tonne after shedding 2.3 percent in the previous session as the dollar firmed, while gold eased 0.2 percent, extending Friday's 2 percent decline.