* MSCI Asia ex-Japan falls 0.6%, holds up vs US market
slide
* Oil and copper extend fall, but higher-yielding FX edge
up
* JGB 10-yr yield hits 3-mth low, Japan investors buy
Treasuries
By Eric Burroughs
HONG KONG, July 3 (Reuters) - Asian stocks retreated on
Friday and the dollar edged up after a disappointingly big drop
in U.S. employment prompted investors to pull back from
commodities, resource-linked shares and higher-yielding
currencies.
But the equity market decline across Asia was limited as
the report showing that U.S. companies slashed nearly half a
million jobs in June did not shake hopes that a slow recovery
is under way.
The Australian dollar, whose 12 percent surge against the
U.S. dollar this year has been closely tied to the four-month
rally in stocks, edged up as the U.S. payrolls report had
limited fallout.
Analysts at Rabobank said the U.S. jobs report was a
"reality check" for investors who had become overly optimistic
about how quickly the global economy could recover from its
deepest recession in decades.
Oil and copper extended their slide. U.S. crude struck a
one-month low and was down 27 cents a barrel at $66.46.
Government bonds jumped, with the benchmark Japanese 10-year
yield touching a three-month low.
"Share losses were limited as investors here did not
necessarily take it as a sign of a further slowdown of global
economies. Belief that economic fundamentals are near their
bottom is still firm here," said Won Jong-hyuck, a market
analyst at SK Securities in Seoul.
The MSCI index of Asia-Pacific shares outside Japan dipped
0.6 percent and was down about 1 percent during the first three
trading days of the third quarter.
In the April-June quarter, the MSCI benchmark for Asian
shares surged 32 percent -- its biggest quarterly gain since
1993 -- on investor hopes that Asia's emerging economies would
help lead the global economy out of the doldrums.
Japan's Nikkei average shed 1 percent, dragged down by a
6.3 percent slide in Seven & I Holdings when the operator of
department stores and supermarkets reported an unexpected drop
in quarterly profit. Shares of oil distributor Nippon Oil lost
2.6 percent.
Asian stocks held up relatively well after the U.S. S&P 500
slid 2.9 percent on the jobs data. U.S. markets are closed
later in the day in observance of the Independence Day holiday
on Saturday.
In currencies, the dollar edged up as investors favoured
the greenback as a safe haven while positions in riskier
currencies and assets were cut.
The dollar index, a gauge of its performance against six
major currencies, edged up slightly to 80.324.
The euro slipped slightly to $1.3990 from near $1.4003 in
late New York trade, down from a one-month peak near $1.42 hit
earlier in the week and hit by hedge fund selling before the
long U.S. weekend. The dollar was little changed at 95.96 yen.
The worries about the recovery outlook added fuel to gains
in government bonds.
The 10-year JGB yield was down 2.5 basis points at 1.330
percent, with some buying spurred after an auction of the
maturity found solid demand the previous day despite a bigger
monthly amount to help pay for stimulus spending.
But Japan's low yields have prompted domestic investors to
go abroad in search of higher returns.
Data from the Ministry of Finance on Thursday showed
domestic investors snapped up 1.53 trillion yen ($16 billion)
of foreign bonds in the weekend ending June 27, the biggest
such weekly purchases in four years. Analysts said those
purchases were mainly concentrated in U.S. Treasuries.
Benchmark U.S. Treasury yields are about 2.2 percentage
points above JGB yields, holding near the widest such level in
eight months and making them attractive to Japanese investors.
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