Asian shares cheered by US jobs data but traders fear trade talks

Asian shares edged higher on Monday after data showed the US unemployment rate dropped to the lowest in almost 50 years, easing concerns of a slowdown in the world's largest economy.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.16 percent. Australian shares were up 0.63 percent. Japan's Nikkei stock index opened higher but reversed course and fell 0.2 percent.

The pan-region Euro Stoxx 50 futures were up 0.2 percent at 3,435, German DAX futures were up 0.18 percent, while FTSE futures were down 0.03 percent.

US stock futures fell 0.39 percent in Asia on Monday after the S&P 500 surged 1.4 percent on Friday.

The offshore yuan fell around 0.3 percent to 7.1337 to the dollar after Bloomberg reported that Chinese officials are signaling they are increasingly reluctant to agree to a broad trade deal pursued by US President Donald Trump.

There was no onshore yuan trading, as Monday is the last day of a long China holiday for its national day.

The media report also pushed up safe-haven assets such as gold and the yen.

Crude oil futures pared losses to trade little changed amid caution about a resolution to the trade dispute.

Sentiment toward the US economy deteriorated sharply much of last week after disappointing data on manufacturing and services suggested the trade war was taking a toll, and more rate cuts would be needed to avert a potential recession in the world's biggest economy.

But a modest September increase in US jobs, announced on Friday, eased some of these concerns and lifted US markets that day. The US unemployment rate fell to 3.5 percent in September to reach the lowest since December 1969. Non-farm payrolls also grew in September, but slightly less than expected.

"Moderate job growth and subdued inflation in the United States is a positive for stocks," said Shusuke Yamada, head of FX and Japan equity strategy at Merrill Lynch Japan Securities in Tokyo.

This week, the main focus will be the high-level US-China trade negotiations expected in Washington on Oct. 10-11 to see if the two sides can end a bruising year-long trade war that has hurt global growth and raised the risk of recession.

"The dollar is a little soft heading into US-China trade talks," said Yamada. "I see some scope for yen gains, but it is not likely to be a big move higher."

The United States and China have slapped tariffs on each other's goods as part of a long-running dispute over Beijing's trading practices, which Washington says are unfair.

Central banks around the world have been easing policy to try to offset the impact of the trade war.

The Federal Reserve has lowered interest rates twice this year. Before the jobs report, traders saw a 85.2 percent chance the Fed will cut rates by 25 basis points to 1.75 percent – 2 percent this month, but that chance has now fallen to 81.1 percent, according to CME Group's FedWatch tool.

The yield on benchmark 10-year Treasury notes rose to 1.5272% on Monday compared with its US close of 1.5140 percent on Friday.

Spot gold, an asset often bought during times of uncertainty, rose 0.05% to $1,505.11 per ounce.