GLOBAL MARKETS-Asian shares near 2-month highs ahead of U.S. payrolls

* Asian stock markets : https://tmsnrt.rs/2zpUAr4
* Asia's MSCI index ex-Japan headed for 5th straight weekly
gain
* Investors focussed on U.S. non-farm payrolls
* Global bond yields near record lows on easy policy
expectations

By Swati Pandey
SYDNEY, July 5 (Reuters) - Asian shares hovered near
two-month highs on Friday, holding recent gains as investors
awaited U.S. employment data, a key release that could make or
break market expectations about aggressive policy easing by the
Federal Reserve.
Trade in global markets is expected to remain subdued
following the Independence Day U.S. public holiday on Thursday
and ahead of the non-farm payrolls report.
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS was set for its fifth straight weekly rise. It
opened a tick higher at 534.40, a level not seen since early
May. Japan's Nikkei .N225 was unchanged at 21,695.9.
E-Minis for the S&P500 ESc1 rose a touch.
World stocks and bonds have rallied since June on hopes
global central banks will keep policy easy to support growth.
All eyes are on U.S. non-farm payrolls, due later in the
day, which is expected to have jumped by 160,000 in June
compared with 75,000 in May. "But if the numbers confirm a loss of momentum in the labour
market or are extremely weak, the focus will return immediately
to the potential for a 50 basis point cut," ANZ analysts told
clients in a note.
Given other U.S. employment demand indicators have been
softer recently, "the bias in the market is probably skewed
towards a weaker outcome," ANZ said.
The Fed holds its two-day policy meeting on July 30-31 and
futures 0#FF: are fully pricing in a 25-basis-point cut.
Investors also see a 25% chance of a 50-basis-point reduction.
The Fed is not alone in embarking on easier monetary policy.
Australia's central bank has cut its cash rate by 50 basis
points since June while leaving the door ajar for a third move
this year. In the euro zone, financial markets expect the bloc's
central bank to lay out the landscape for further monetary
easing at its July 25 meeting. Prospects of global easings has sent government bond yields
to multi-year low around the world.
Germany's 10-year government bond yield DE10YT=RR , a
benchmark for euro zone debt, fell to -0.4% and matched the
European Central Bank's deposit rate for the first time -- a
sign that markets are expecting rate cuts. Yields on U.S. 10-year Treasuries US10YT=RR hit their
lowest since November 2016 on Wednesday.
The currency market was mostly sidelined ahead of the U.S.
jobs figures.
The dollar index .DXY was a tick lower at 96.725, drifting
away from recent two week highs.
The index, which measures the greenback against a basket of
major currencies, fell 1.7% just last month as investors priced
in a 50-basis-point cut from the Fed. Those expectations had
faded in recent days on more reserved Fed commentary and signs
of improvements in Sino-U.S. trade relations, but have since
come back on weak U.S. economic data.
A weaker greenback has boosted the Australian dollar
AUD=D4 despite a rate cut on Tuesday. The Aussie is so far up
1.4% this week and last held at $0.7026.
"With the USD now in the grip of uncertainty as to what
extent the Fed is prepared to cut rates this year, the AUD could
yet enjoy an extended run into the 70s," BNY Mellon senior
currency strategist Neil Mellor said.
Against the Japanese yen JPY= , the dollar inched up to
107.84.
The euro traded at $1.1284 EUR= , a touch higher than its
two-week low of $1.1268 seen on Wednesday.
In commodity markets, oil fell on data showing a
smaller-than-expected decline in U.S. crude stockpiles and
worries about the global economy. O/R
Brent crude futures LCOc1 , the international benchmark for
oil prices, were a tick weaker at $63.23 per barrel while U.S.
crude eased to $56.69.
Spot gold XAU= was higher at $1,417.2 an ounce.

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(Editing by Sam Holmes)