SINGAPORE (Reuters) - Asian stocks advanced on Monday, taking their cue from Wall Street, while the dollar moderated but retained most of its gains after a stronger-than-expected July job report.
European markets look set to extend the global rally, with financial spreadbetter CMC Markets expecting Britain’s FTSE to open 0.3 percent higher, and France’s CAC 40 and Germany’s DAX to start the day up 0.2 percent.
MSCI’s broadest index of Asia-Pacific shares outside Japan added 0.6 percent.
That helped lift the MSCI World index 0.2 percent to an all-time high.
Japan’s Nikkei was up 0.6 percent.
But Chinese blue chips managed only slight gains, with investors hesitant to stake out fresh positions ahead of a raft of July data due this week and next.
Following July foreign exchange reserves data on Monday, China will release trade data on Tuesday and inflation on Wednesday. Bank lending numbers could come later this week while industrial output, retail sales and investment readings will be released next Monday.
Analysts expect the data will show China’s economy carried strong growth momentum into the third quarter.
The dollar eased on Monday following a strong climb on Friday after data showed U.S. nonfarm payrolls rose by 209,000 jobs last month, and June’s employment gain was revised higher.
Growing signs of labour market tightness offer Federal Reserve policymakers some assurance that inflation will gradually rise to the central bank’s 2 percent target, and likely clear the way for a plan to start shrinking its massive bond portfolio later this year.
But market pricing shows investors are still about evenly divided over whether the Fed will also opt to raise rates again in December.
The dollar was also buoyed by comments from National Economic Council director Gary Cohn that the U.S. administration is working on a tax plan that would bring corporate profits back to the United States.
But Monday’s pull back in the dollar backs some views in markets that Friday’s rally may not have legs.
The dollar index, which tracks the greenback against a basket of six global peers, inched back 0.2 percent to 93.361. It rallied 0.76 percent on Friday, its biggest one-day gain this year.
The dollar slipped 0.2 percent against the euro to $1.1796 per euro, after surging 0.8 percent on Friday.
The greenback was flat at 110.68 yen, holding Friday’s 0.6 percent gain.
“The most logical view here is the moves on Friday were clearly just a sizeable covering of USD shorts, from what was one of the biggest net short positions held against the USD for many years,” Chris Weston, chief market strategist at IG in Melbourne, wrote in a note.
For the dollar rally to gain momentum, the market needs to change its interest rate pricing, Weston added.
Benchmark 10-year U.S. Treasury notes were flat at 2.2691 percent, and up from Thursday’s close of 2.228 percent.
The lift in sentiment from Friday’s jobs data also supported Wall Street. The Dow closed 0.3 percent higher, its eighth consecutive record high. The S&P and Nasdaq ended the session up 0.2 percent.
But geopolitical tensions continued to give Asian investors pause.
South Korean President Moon Jae-in and his U.S. counterpart, Donald Trump, agreed to apply maximum pressure and sanctions on North Korea in a telephone call on Monday, while China expressed hope that North and South Korea could resume contact soon.
But North Korea’s foreign minister said Seoul’s proposals to improve ties with the isolated state show a lack of sincerity when South Korea is also imposing sanctions on the North with the U.S.
The U.N. Security Council unanimously imposed new sanctions on North Korea on Saturday aimed at pressuring Pyongyang to end its nuclear programme. The sanctions could slash North Korea’s $3 billion annual export revenue by a third.
The Korean won weakened almost 0.2 percent, with the dollar buying 1,126.9 won.
The Australian dollar strengthened 0.1 percent to $0.794.
In commodities, oil prices edged lower but retained most of Friday’s gains as the strong job data bolstered hopes for growing energy demand.
Officials from a joint OPEC and non-OPEC technical committee are set to meet in Abu Dhabi on Monday and Tuesday to discuss ways to boost compliance with their supply reduction agreement.
U.S. crude slipped 0.3 percent to $49.43 a barrel, after rising 1.1 percent on Friday.
Global benchmark Brent also lost 0.3 percent to $52.25, after Friday’s 0.8 percent gain.
Gold steadied as the dollar surrendered some of its gains, but remained under pressure. The precious metal was marginally lower at $1,257.27 an ounce, extending Friday’s 0.8 percent loss.
Reporting by Nichola Saminather; Editing by Richard Borsuk and Kim Coghill