* China CSI300 falls 2.2 pct, Beijing signals to cut off
* Dollar hits 6-wk high vs yen, euro hovers near 7-wk low vs
* Ten-yr Treasury yield turns lower after hitting highest in
* European shares expected to open higher
By Dominic Lau
TOKYO, July 8 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
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
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
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
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
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
"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.