* Asia shares climb after Trump scraps Mexico tariffs
* European markets expected higher, U.S. stocks futures up
* Weak U.S. payrolls data bolsters Fed rate cut expectations
* Yuan at late-2018 lows; China's May imports disappoint
* Asian stock markets: https://tmsnrt.rs/2zpUAr4
By Hideyuki Sano and Noah Sin
TOKYO/HONG KONG, June 10 (Reuters) - Asian shares, European
and U.S. stock futures rose on Monday after the United States
shelved plans to impose tariffs on Mexico and as global
investors hoped for lower U.S. interest rates on the back of
lacklustre jobs data.
Global investors had feared that opening up another trade
conflict, while still battling with China, could tip the United
States and other economies into recession. The Mexican peso
MXN= rallied more than 2% on Monday. But in China, the yuan slipped to its weakest this year
after the country's imports fell the most in nearly three years
and as talks to end the Sino-U.S. dispute remained deadlocked.
In the stock market, European futures pointed to a higher
open. Pan-region Euro Stoxx 50 futures STXEc1 rose 0.4%,
London's FTSE futures FFIc1 were up 0.5% and German DAX
futures FDXc1 gained 0.6%.
Earlier, S&P500 mini futures ESv1 rose as much as 0.8% and
was last up 0.3%. The 10-year U.S. Treasuries yield was seen at
2.1223 percent US10YT=RR , after hitting a 21-month low of
2.053 percent on Friday on soft U.S. jobs data.
In Asia, Tokyo's Nikkei .N225 gained 1%, while MSCI's
index of Asia-Pacific shares outside Japan .MIAPJ0000PUS rose
as much as 1%, led by strong gains in Hong Kong .HSI and
Indonesia .JKSE . The improved risk sentiment also helped lift the dollar
against the yen 0.4% to 108.64 JPY= .
"The deal with Mexico is boosting sentiment while
expectations of U.S. rate cuts will be also supporting share
prices," said Masahiro Ichikawa, senior strategist at Sumitomo
Mitsui DS Asset Management.
"Still, with limited progress seen so far in U.S.-China
trade talks, the most important issue for markets, stock prices
will be able to rise only so much," he added.
Pictet Wealth Management said in a Monday note it has moved
to a "tactically underweight" stance on global equities, citing
"elevated valuations, mixed economic data and rising trade
tensions".
That cautionary note was driven home by Chinese data on
Monday morning showing imports in May contracted 8.5% from a
year earlier, a much worse than expected outcome that signalled
weak domestic consumption.
Exports, however, unexpectedly rose 1.1% last month, though
many suspect the uptick is linked to front-loading of shipments
by firms to avoid higher U.S. tariffs. In the United States, expectations the Federal Reserve will
cut rates kept the dollar on the defensive after a weak jobs
report from the U.S. Labor Department.
Nonfarm payrolls increased by 75,000 jobs last month, much
smaller than the 185,000 additions estimated by economists in a
Reuters poll. Wage growth, closely watched for its impact on inflation,
cooled to 3.1 percent from a year earlier, the slowest annual
increase since September. Just three months earlier, wages had
been rising at their fastest rate in a decade.
Fed funds rate futures prices, down on Monday after the
Mexico deal, were still pricing in more than two 25-basis point
rate cuts by the end of this year, with one almost fully priced
in by July. FEDWATCH
"I would expect optimism to rule markets until the next
Fed's meeting," said Naoya Oshikubo, senior economist at
Sumitomo Mitsui Trust Asset Management.
The Federal Reserve's next policy meeting is set for next
week, on June 18-19.
The euro was down almost 0.3% against the dollar at $1.1301
EUR= near a 2-1/2-month high of $1.1347 touched on Friday.
Gold slipped almost 1% XAU= , having hit a 14-month high of
$1,348.1 per ounce on Friday, near a major resistance around
$1,350.
The yuan softened following China's weak May imports data,
and after the country's central bank chief said last week there
was no one specific "numerical number" that was more important
than another when asked if there is a red line for Beijing.
"Recent comments from current and former central bank
governors suggest a consensus is building among Chinese
policymakers that they do not attach much significance to
defending the seven per dollar level," said Ei Kaku, currency
strategist at Nomura Securities.
The onshore yuan CNY=CFXS fell as much as 0.35% to as low
as 6.9366 per dollar, its weakest since early December, when
Trump last met Chinese President Xi Jinping for trade talks.
The offshore yuan CNH=D3 was last seen at 6.9502 per
dollar, having hit a seven-month low of 6.9619 on Friday.
"The yuan would weaken further should there be no summit
meetings between the two countries at an upcoming G20 meeting in
Osaka," Nomura's Kaku said.
Many investors are still clinging to hopes that Trump will
meet Xi on the sidelines of the Group of 20 leaders' meeting
late this month to seek a compromise on trade and other economic
issues.
The meeting has some parallels with their Buenos Aires
summit last December that postponed a tariff hike, U.S. Treasury
Secretary Steven Mnuchin said on Saturday. G20 finance leaders on Sunday acknowledged "intensified"
trade tensions' risks to global growth, but did not call for a
resolution of the U.S.-China dispute. Oil prices extended gains after Saudi Arabia said on Friday
OPEC and non-member Russia were close to agreeing to extend an
output production cut beyond June and as Wall Street rallied.
Brent futures LCoc1 rose almost 0.4% to $63.51 per barrel
while U.S. crude futures CLc1 gained 0.4% to $54.22.
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Non farm payroll as of May 19 https://tmsnrt.rs/2WX2yUZ
Yuan and trade war https://tmsnrt.rs/2WXLtuj
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(Editing by Shri Navaratnam and Jacqueline Wong)