GLOBAL MARKETS-Asian shares shaky, oil slumps on Saudi price cuts

(Adds European futures, updates levels throughout)
* Asian stock markets : https://tmsnrt.rs/2zpUAr4
* Japan's Nikkei falls, Chinese shares in red
* MSCI ex-Japan barely changed after two straight days of
losses
* Currency market action muted
* Oil falls more than $1 after Saudi price cuts

By Swati Pandey
SYDNEY, Sept 7 (Reuters) - Asian shares struggled for
traction on Monday after two straight sessions of losses as
investors grappled with sky-high valuations at a time when the
global economy is in a coronavirus-induced recession while oil
prices dropped sharply.
European stock futures started in the black with those for
eurostoxx 50 STXEc1 and Germany's Dax FDXc1 up 0.9% while
London's FTSE futures FFIc1 rose 1%.
But the signal for Wall Street was gloomy - E-Mini futures
for the S&P 500 ESc1 slipped 0.5% and Nasdaq futures NQc1
slid 1.3%, dragged lower by the exclusion of Tesla TSLA.O from
a group of companies that were being added to the S&P 500.

U.S. markets will be closed on Monday for the Labour Day
holiday.
The mood across Asian markets was tentative.
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS was last flat after two straight days of losses
toppled it from a 2-1/2-year peak last week.
China's blue-chip index .CSI300 slipped 0.9% while shares
of Hong Kong-listed Semiconductor Manufacturing International
Corp 0981.HK (SMIC) plunged to the lowest since June 16 on
fears China's largest chipmaker could be added to a U.S. trade
blacklist.
Data earlier on Monday showed Chinese imports fell 2.1% in
August from a year earlier, confounding expectations for a 0.1%
increase, in a sign of sluggish domestic demand. Exports jumped
by a larger-than-expected 9.5%.
Japan's Nikkei .N225 fell 0.5% with SoftBank 9984.T
coming under heavy selling following media reports it has spent
at least $4 billion buying call options on listed U.S.
technology stocks. Australian shares .AXJO , which had opened in the red,
reversed losses to finish 0.2% higher, while South Korea .KS11
added 0.55%.
World shares .MIWD00000PUS hit a record high last week as
central bank stimulus drove asset valuations to heady levels.
The rally has since cooled as tech stocks sold off while worries
over patchy economic recovery dogged investors.
Sharp sell-offs have recovered quickly in recent months
though analysts expect further downside to this leg due to
rising cross-asset volatility .VIX .
"Our risk indices have begun to turn from their euphoria
highs," Jefferies said.
"It is not unthinkable that global equities are set to churn
in a range for a while as some of the orphan sectors/countries
are refranchised while the richly valued sectors pause or
unwind," it added.
"On the balance of probabilities, last week's correction has
further room to go."
Jefferies said it was switching its weighting on MSCI All
World index to "tactically bearish" in the short term.
It noted that a gauge of volatility .VIX has nudged higher
in the past three months alongside a steepening in the U.S.
10-year to 5-year Treasury yield curve as well as the 30-year to
5-year curve.
"We wonder how much moves in both would upset the equity
market," Jefferries said.
Later this week, investors will look for data on U.S.
inflation with both producer and consumer prices expected to
remain mostly steady.
"With slack in the labour market and broader economy to
remain for years, it's hard to see where sustainably higher
inflation will come from," Brown Brothers Harriman said in a
note.
"That said, the bottom line is that U.S. rates will stay
lower for longer. Full stop."
In commodities, oil prices dropped more than $1 a barrel,
hitting their lowest since July, after Saudi Arabia made the
deepest monthly price cuts for supply to Asia in five months.
O/R
Fading optimism about a recovery in demand amid the
coronavirus pandemic also hung heavy. U.S. crude CLc1 fell
1.26% to $39.19 a barrel. Brent crude LCOc1 skidded 1.29% to
$42.11.
Policy meetings at the Bank of Canada on Wednesday and the
European Central Bank the following day were also on investors'
radar, with both expected to keep policy steady.
Action in the forex market was muted.
In currencies, the dollar was flat against the yen at 106.28
JPY= ahead of a heavy week of macroeconomic data with figures
on household spending, current account and gross domestic
product due on Tuesday.
The euro held at $1.1834 while the British pound GBP= was
0.4% weaker at $1.3224 ahead of a new round of Brexit talks with
the European Union on Monday.

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Asia stock markets https://tmsnrt.rs/2zpUAr4
Asia-Pacific valuations https://tmsnrt.rs/2Dr2BQA
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
(Editing by Shri Navaratnam and Jacqueline Wong)