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Shares rise, safe havens sold on trade war optimism, firm U.S. data

Shares rise, safe havens sold on trade war optimism, firm U.S. data
FILE PHOTO: A man riding on a bicycle looks at an electronic board showing the Japan's Nikkei average outside a brokerage in Tokyo February 24, 2015. REUTERS/Yuya Shino -
Yuya Shino(Reuters)
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By Shinichi Saoshiro

TOKYO (Reuters) – Asian stocks tracked global peers and rose on Friday while safe havens such as government bonds and the yen were sold amid signs of easing U.S.-China trade tensions and as firm U.S. economic data bolstered risk appetites.

MSCI’s broadest index of Asia-Pacific shares outside Japan <.MIAPJ0000PUS> added 0.2%, putting it on track for a 2% weekly gain – which would make it the best week since mid-June..

Australian stocks <.AXJO> gained 0.5%, South Korea’s KOSPI <.KS11> rose 0.3% and Japan’s Nikkei <.N225> advanced 0.6%.

Global equity markets welcomed news that the United States and China agreed on Thursday to hold high-level talks early in October, raising hopes for substantial progress in de-escalating the long, bitter trade conflict between the two.

Risk sentiment was further improved by upbeat U.S. data on Thursday.

U.S. private payrolls increased in August at their fastest pace in four months, according to ADP. Separately the U.S. services industry rebounded last month to its fastest expansion since February, according to the Institute for Supply Management’s non-manufacturing purchasing managers index (PMI).

“The strong U.S. data are the main part of the latest turn in markets as they are key factors impacting equities and U.S. yields, therefore determining how long this ‘risk on’ phase will last,” said Junichi Ishikawa, senior FX strategist at IG Securities in Tokyo.

On Thursday, the Dow <.DJI> added 1.4%, the S&P 500 <.SPX> climbed 1.3% and Nasdaq <.IXIC> rose 1.75%.

Ishikawa said Friday’s U.S. August jobs report “will get more attention than usual as it could add further fuel the risk-on phase, which in turn would boost the dollar.”

The non-farm payroll report is expected to show an increase of 158,000 and the unemployment rate holding steady at 3.7%.

The dollar stood at 107.070 yen <JPY=> after climbing to a one-month high of 107.235 overnight. The greenback has gained about 0.7% against the Japanese currency this week as the decrease in risk aversion reduced demand for the safe-haven yen.

The pound <GBP=D3> hovered near a six-week peak of $1.2353 scaled the previous day on hopes that Britain could avoid exiting the European Union without a deal.

The euro was steady at $1.1034 <EUR=> after rising 0.5% overnight, when it was lifted by sterling’s bounce.

The dollar index against a basket of six major currencies <.DXY> was little changed at 98.420 after pulling back from a one-week low of 98.085 the previous day on a rise by U.S. Treasury yields.

U.S. Treasuries fell in price and their yields rebounded from multi-year lows as investors moved out of safety assets into equities. [US/]

The 10-year Treasury yield <US10YT=RR> was at 1.532%, having risen from a three-year trough of 1.428% plumbed midweek on soft economic data and Sino-U.S. trade worries.

Japan’s 10-year government bond yield <JP10YTN=JBTC> climbed 2.5 basis points to minus 0.250%, putting some distance between a three-year low of minus 0.295% set earlier this week.

Brent crude oil futures <LCOc1> slipped 0.26% to $60.79 per barrel, losing some traction after posting strong gains over the past two sessions.

Brent had climbed to a one-month peak of $62.40 per barrel on Thursday on a decline in U.S. crude inventories and tempered trade war concerns.

(Editing by Richard Borsuk)

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