* Asian shares resume descent after rebound Friday
* Oil jumps, Saudi shares tumble on Khashoggi’s disappearance
* Pound falls after no agreement reached ahead of EU summit
By Hideyuki Sano
TOKYO, Oct 15 (Reuters) - Asian shares slipped on Monday as worries over Sino-U.S. trade disputes, a possible slowdown in the Chinese economy and higher U.S. borrowing costs tempered optimism despite a rebound in global equities late last week.
Not helping the mood, oil prices jumped and Saudi Arabian shares tumbled on rising diplomatic tensions between Riyadh and the West after the monarchy warned against threats to punish it over disappearance of a journalist.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.3 percent while Japan’s Nikkei dropped 0.9 percent.
MSCI’s broadest gauge of the world’s stock markets , was off 0.1 percent after a sizable 3.87 percent decline last week to a one-year nadir, and marking its biggest weekly fall since March.
The market shakeout has been blamed on a series of factors, including worries about the impact of a U.S.-China trade war, a spike in U.S. bond yields this week and caution ahead of earnings season.
Although selling appeared to have abated on Friday, partly after Chinese trade data showed strong growth in September, many investors remained cautious.
“Some people say markets drew comfort from China’s exports data. But to me it seems so obvious the numbers were inflated by front-loading ahead of the introduction of tariffs,” said Norihiro Fujito, chief investment analyst at Mitsubishi UFJ Morgan Stanley Securities.
Fujito said the trade war is starting to take a toll on growth in China, noting that data released later on Friday showed auto sales in China posted the biggest drop in seven years.
Over the weekend China central bank governor Yi Gang said he still sees plenty of room for adjustment in interest rates and the reserve requirement ratio (RRR), as downside risks from trade tensions with the United States remain significant.
Rises in U.S. borrowing costs are also seen hurting weak borrowers, especially those in emerging markets.
Although the U.S. 10-year yield posted its first major fall in about two months last week, any signs of inflation could push them up again. The yield rose 1.5 basis points on Monday to 3.156 percent.
Also starting to attract wider attention, Saudi Arabia doubled down on pressure from the West on the disappearance of Jamal Khashoggi, a U.S. resident and Washington Post columnist.
U.S. President Donald Trump has threatened “severe punishment” if it turns out Khashoggi was killed in the consulate.
Saudi Arabia’s shares plunged as much as 7 percent on Sunday, and closed down 3.5 percent at their lowest levels since early January.
Shares in Dubai, a regional economic hub, slid 1.5 percent to a low last seen in January 2006.
Oil prices reversed their downtrend since early this month.
Brent crude futures rose 1.7 percent to $81.82 per barrel, bouncing back from Friday’s near-three-week low of $79.23.
Investors were also bracing for a European Union summit meeting from Wednesday.
The British pound shed 0.4 percent in early Asian trade on Monday to $1.3096 after negotiators from the European Union and the UK failed to clinch a Brexit deal ahead of the crucial summit.
The euro traded at $1.1593, down slightly after Chancellor Angela Merkel’s Bavarian allies suffered their worst election result since 1950 on Sunday.
On the other hand, the dollar is seen under pressure against the yen after U.S. Treasury Secretary Steven Mnuchin said on Saturday that Washington wants to include a provision to deter currency manipulation in future trade deals, including with Japan.
That raised worried among Japanese policy circles that this would give Washington the right to label as currency manipulation any future foreign exchange market interventions by Tokyo to keep sharp yen rises in check.
In early trade, the yen is little changed at 112.20 per dollar. (Editing by Shri Navaratnam)