GLOBAL MARKETS-U.S. stock futures, Asian shares gain as Mexico tariffs averted

* S&P futures up 0.6%, Mexico peso up 1.6%
* Weak U.S. payrolls data bolster Fed rate cut expectations
* U.S. money market futures price in 2 rate cuts this year
* Asian stock markets: https://tmsnrt.rs/2zpUAr4

By Hideyuki Sano
TOKYO, June 10 (Reuters) - U.S. stock futures and Asian
shares rose on Monday after the United States dropped its threat
to impose tariffs on Mexico in a deal to combat illegal
migration from Central America, while weak U.S. jobs data raised
hopes for U.S. interest rate cuts.
The Mexican peso jumped 1.75 percent in early Monday trade
to 19.2579 on the dollar MXN= on news of the removal of the
tariff threat. But relief was widespread, as 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.
S&P500 mini futures ESv1 rose 0.4% and the 10-year U.S.
Treasuries yield jumped back 3 basis points to 2.115 percent
US10YT=RR , after hitting a 21-month low of 2.053 percent on
Friday on soft U.S. jobs data.
Japan's Nikkei .N225 gained 1.2 percent and South Korea's
Kospi .KS11 rose 0.55 percent while Australian markets were
closed for a holiday, with MSCI's index of Asia-Pacific shares
outside Japan .MIAPJ0000PUS almost flat.
The improved risk sentiment also helped lift the dollar
against the yen 0.15% to 108.38 yen 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.
Expectations the Fed 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,
slowed 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.
Although Fed funds rate futures prices dropped on Monday
after the Mexico deal, they are 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.
"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's next policy meeting is set for next week, on
June 18-19.
The euro was little changed at $1.1329 EUR= near a
2-1/2-month high of $1.1348 touched on Friday. The common
currency held firm near five-month highs against sterling at
88.965 pence EURGBP= .
Gold slipped 0.2% XAU= but stood not far from Friday's
14-month high of $1,348.1 per ounce, near a major resistance
around $1,350.
The Chinese yuan was soft. The offshore yuan traded at
6.9385 yuan per dollar CNH=D4 , having hit a seven-month low of
6.9616 on Friday.
China's trade data due later in the day will be keenly
watched for the impact of the Sino-U.S. trade war.
Group of 20 finance leaders on Sunday said that trade and
geopolitical tensions have "intensified", raising risks to
improving global growth, but they stopped short of calling for a
resolution of the deepening U.S.-China trade conflict.
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 0.8% to $63.79 per barrel while
U.S. crude futures CLc1 rose 0.8% to $54.44.