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GLOBAL MARKETS-Asia stocks mark time ahead of key US jobs data

Published 09/03/2010, 03:19 AM
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* Investors mark time before U.S. jobs data at 1230 GMT

* Asian stocks up just 0.3 percent

* Yen near 15-yr high against dollar

SYDNEY, Sept 3 (Reuters) - Asian stocks squeezed higher on Friday but gains were tentative ahead of U.S. jobs data that will be closely watched for signals on whether the world's biggest economy is headed for a second recession.

There was no missing the sombre mood ahead of the employment report at 1230 GMT. Surprisingly strong U.S. manufacturing data earlier this week had dispelled some gloom about faltering growth, but investors were far from convinced all was well.

The cautious tone spill over into Europe, where the FTSEurofirst 300 index of top shares, Britain's FTSE 100, Germany's Dax and France's CAC 40 all edged up 0.2-0.3 percent. U.S. S&P 500 futures weakened a fraction.

Yet, some warned the gloom may be overdone.

"Market players have been building up positions for some time to brace for a weak U.S. recovery. Any upside surprise in the payrolls data could move the market," said Daisuke Karakama, market economist at Mizuho Corporate Bank.

The MSCI Asian stock index outside Japan edged up just 0.3 percent. Japan's Nikkei rose 0.6 percent, but was still down more than 13 percent for the year.

Sony Corp managed to shrug off economic woes by adding 2.4 percent after it said it was expanding a video-on-demand service in Europe.

The U.S. labour market is forecast to have shed 100,000 jobs in August as the jobless rate crept higher to 9.6 percent.

As always, a bad outcome would likely hammer assets deemed dependent on strong economic growth, such as stocks and commodities, whilst boosting government bonds.

Underscoring angst about U.S. growth, traditional safe-haven currencies clung to recent peaks, while U.S. Treasury yields edged lower.

The yen was locked near a 15-year high against the dollar, while the Swiss franc flew near a record against the euro.

Commodity prices barely budged. Gold was little changed at $1,251.25 an ounce and oil was down 0.4 percent at 74.70 a barrel.

CAN ASIAN MARKETS HOLD UP?

Many believe Asian economies can charge ahead even with tepid U.S. growth, owing to sturdy demand from emerging market giants China and India.

Yet, it is less clear Asian stocks can weather a U.S. slowdown.

Some argue that despite Asia's stellar growth profile, its equity markets are still inextricably linked to developed markets -- institutional investors in the west are still among the biggest buyers of Asian stocks.

Mark Matthews from Macquarie in Hong Kong, for instance, said the correlation between the MSCI Asia ex-Japan stock index and the MSCI World Index has risen to 0.8 between 2005 and 2010, from 0.63 in the five years up to 2005.

Price action so far seemed to suggest that holds some truth. The MSCI Asia ex-Japan index has defied the region's impressive growth and is down 0.7 percent this year. The MSCI World index is also down, but by a bigger margin at 3.5 percent.

But other argued that over the longer term, Asia's solid growth and healthy public finance would increasingly help it to survive thriftier U.S. and European consumers.

"In the short term, I don't think any market is immune to news flow, not least from the U.S. and its payrolls," said Alex Boggis, a fund manager at Aberdeen, which manages more than $246 billion in assets.

"But longer term, it would do better, and in the medium term, it would do better." (Reporting by Koh Gui Qing; Editing by Alex Richardson)

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