Asian shares set for best week in 5 months, await US jobs data

By Hideyuki Sano and Nichola Saminather

TOKYO/SINGAPORE (Reuters) - Asian shares looked set on Friday to post their strongest week in five months as global investors returned to riskier assets after a string of positive U.S. economic data and a bounce in oil and commodity prices.

The rebound could continue if the February U.S. employment report later in the session shows job gains but remains weak enough to discourage rate increases in the near term.

MSCI's broadest index of Asia-Pacific shares outside Japan (MIAPJ0000PUS) rose 0.4 percent to the highest in almost two months. That put in on track for a 5.4 percent gain for the week, the its strongest weekly performance since October.

Japan's Nikkei (N225) was little changed on the day but poised for a weekly gain of 4.7 percent.

"Globally, markets are rolling back the extreme risk-off trading they did in January and February," said Norihiro Fujito, senior investment strategist at Mitsubishi UFJ Morgan Stanley (NYSE:MS) Securities. "Part of the reason is that the Fed seems to be easing its insistence on raising rates."

Chinese shares, however, failed to gain from the optimism, with the Shanghai Composite index <.SSEC> down 0.5 percent, while the CSI 300 (CSI300) was little changed. Investors are awaiting the start of the annual meeting of China's parliament on Saturday, which will map out economic goals for the next five years.

The MSCI World equity index covering 46 markets (MIWD00000PUS) held near its two-month high touched on Thursday.

The rally was led by emerging markets, with a measure of emerging-markets shares (MSCIEF) rising 0.4 percent on Friday for a sixth day of gains, its longest winning streak since October.

The biggest move on Thursday came from Brazil's Bovespa index (BVSP), which rose more than 5 percent, its biggest gain in six years, on news that President Dilma Rousseff could be implicated in a sweeping corruption scandal.

That encouraged investors who blame her administration's policies for driving Brazil into deep recession.

On Wall Street, the S&P 500 Index (SPX) rose 0.35 percent to a two-month high of 1,993.4.

U.S. data on Thursday was positive on the whole, with factory orders rising and the service sector index showing continued expansion.

Somewhat dimming the optimism, however, the services survey showed employment in the sector fell in February for the first time in two years.

But that was not necessarily bad for U.S. stocks, as it helped to reduce expectations for a rate hike this month by the Federal Reserve, and pushed the dollar lower.

The dollar's index against a basket of six major currencies (DXY) <=USD> slipped 0.6 percent on Thursday. It pared some of those losses to trade up 0.1 percent at 97.712 on Friday.

The dollar's weakness helped push gold to a 13-month high of $1,268.30 per ounce on Thursday. The precious metal was last trading at 1,259.50.

The euro jumped back to $1.0938 from Wednesday's one-month low of $1.08255.

The yen traded at 113.61 to the dollar, recovering from Wednesday's two-week low of 114.56.

The Australian dollar stood at $0.7364, holding near a three-month high of $0.7374 hit on Thursday, helped by rising iron ore prices. It's on track for a weekly gain of 3.2 percent, the most in five months.

Spot iron ore for immediate delivery to China's Tianjin port <.IO62-CNI=SI> hit a 4-1/2-month high on Thursday.

Commodity prices have been on the mend, with oil recovering more than 30 percent from January's 12-year lows, helped by hopes of measures to ease global glut.

Brent futures (LCOc1) touched a two-month high of $37.40 per barrel this week. They were last trading at $37.20, on track for a gain of 6 percent this week.

U.S. crude futures (CLc1) have risen 6.2 percent this week to $34.80.