Asian shares, currencies fall on Fed tapering worries

TOKYO - Asian shares fell to a four-week low on Monday as a surprise surge in US jobs growth heightened worries the Federal Reserve will start reducing stimulus as soon as next month -- boosting the dollar against the euro, yen and emerging currencies.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS shed 0.5 per cent, hitting its lowest since October 11 and extending Friday's 1 per cent drop.

Jakarta shares .JKSE fell 0.8 per cent, Thai stocks .SETI lost 1.5 per cent and the Manila bourse .PSI dropped 1.7 per cent.

"Stronger than expected US labour market report will increase fears of portfolio capital outflow from emerging markets, and will weigh on current account deficit currencies in particular," Credit Agricole CIB said in a client note.

Emerging Asian currencies came under pressure, with the Indonesian rupiah down 1 per cent to 11,551 per dollar, hitting a one-month low, and Thai baht off 0.9 per cent to 31.66 to a seven-week trough.

The Indian rupee was down 1.3 per cent at 63.281 per dollar while the Philippine peso eased 0.5 per cent to 43.38 against the greenback, a one-month low.

Major European indexes .FTSE .GDAXI .FCHI were expected to open flat to modestly higher.

US employers took on 204,000 new employees last month, almost twice the number forecast by analysts and defying expectations that the partial US government shutdown would hamper job growth.

The strong data raised the prospect the Federal Reserve may soon decide to start winding down its $85 billion-a-month bond-buying programme.

Fed Chairman Ben Bernanke and two other top policymakers suggested continued support for the US central bank's massive stimulus campaign, however.

A hedge fund manager said it was unlikely that the Fed will start reducing stimulus by year-end.

"If people get concerned about rates in the US moving higher and QE ending sooner, obviously that will have an impact. But I don't think it's going to happen anytime soon," he said.

"I just think they wouldn't do anything before the end of the year because of the impact on sentiment and consumption. I think it's too early to talk about it."

The Chinese CSI300 Index .CSI300 rose 0.4 per cent in a choppy session after touching a 2-1/2 month low, with investors awaiting the end of a four-day closed-door policy meeting of the Chinese Communist Party on Tuesday that will set the economic agenda for the next decade.

China's annual inflation climbed to an eight-month high in October, fuelling market worries about policy tightening as factory output and investment data pointed to signs of stabilization in the world's second-largest economy.


The dollar was steady at 99.005 yen, not far from a seven-week high of 99.41 yen reached last Thursday, and up 0.1 per cent at $1.33585 to the euro, having gained 0.4 per cent on Friday.

Against a basket of major currencies, the dollar .DXY stood at 81.258, within striking distance to a two-month high of 81.482 touched on Friday.

As the yen weakened, Japan's Nikkei benchmark .N225 climbed 1.3 per cent in relatively light trade after losing 0.8 per cent last week.

US S&P E-mini futures were little changed in Asian trade after the Standard & Poor's 500 index .SPX advanced 1.3 per cent on Friday.

US Treasury futures added 2 ticks after the 10-year US Treasury yield rose as much as 15 basis points to a four-week high of 2.763 per cent on Friday.

Gold slipped 0.3 per cent to about $1,284.5 an ounce, adding to Friday's 1.5 per cent decline and languishing near a three-week low on worries that the Fed will soon remove its support for the economy.

Brent crude prices rose 0.3 per cent to around $105.4 a barrel, building on Friday's 1.6 per cent rise, which broke a three-day run of losses and rebounded from a four-month trough.