* MSCI Asia ex-Japan dips 0.3 pct, holds up vs U.S. market
* S.Korea's KOSPI up 0.6 pct on tech and pharmaceutical
gains
* Oil and copper extend fall, but Aussie dollar climbs
* JGB 10-yr yield hits 3-mth low
* Japan investors buy Treasuries
By Eric Burroughs
HONG KONG, July 3 (Reuters) - Asian stocks retreated on
Friday and the dollar edged up after a disappointingly big drop
in U.S. employment prompted investors to pull back from
commodities and resource-linked shares.
But the equity market decline across Asia was limited as
the report showing that U.S. companies slashed nearly half a
million jobs in June did not shake hopes that a slow recovery
is under way. []
European shares were poised for a slight bounce in early
trade, with futures on the Dow Jones Eurostoxx 50 <STXEc1> up
0.1 percent.
The Australian dollar, whose 12 percent surge against the
U.S. dollar this year has been closely tied to the four-month
rally in stocks, bounced back from a slide the previous day as
the U.S. payrolls report had limited fallout.
Analysts at Rabobank said the U.S. jobs report was a
"reality check" for investors who had become overly optimistic
about how quickly the global economy could recover from its
deepest recession in decades.
Oil and copper extended their slide. U.S. crude struck a
one-month low and was down 2 cents a barrel at $66.71 <CLc1>.
Government bonds jumped, with the benchmark Japanese 10-year
yield touching a three-month low.
"U.S. jobs data dented brewing hopes of an economic
turnaround, but share losses were limited as investors here did
not necessarily take it as a sign of a further slowdown of
global economies," said Won Jong-hyuck, a market analyst at SK
Securities in Seoul.
The MSCI index of Asia-Pacific shares outside Japan
<.MIAPJ0000PUS> dipped 0.3 percent and was down 0.6 percent
during the first three trading days of the third quarter.
In the April-June quarter, the MSCI benchmark for Asian
shares surged 32 percent -- its biggest quarterly gain since
1993 -- on investor hopes that Asia's emerging economies would
help lead the global economy out of the doldrums.
Data from fund tracker EPFR Global showed that global
emerging markets received a record amount of funds in the
second quarter. China-focused funds took in $3.8 billion, while
Asian funds excluding Japan took in more than $23 billion.
Japan's Nikkei average <> shed 0.6 percent, dragged
down by a 5 percent slide in Seven & I Holdings <3382.T> when
the operator of department stores and supermarkets reported an
unexpected drop in quarterly profit. Other Japanese retailers
also lost ground.
The pull-back in energy prices knocked down shares of oil
distributor Nippon Oil <5001.T> by 2 percent.
Asian stocks held up relatively well after the U.S. S&P 500
<.SPX> slid 2.9 percent on the jobs data.
U.S. markets are closed on Friday in observance of the
Independence Day holiday on Saturday.
In currencies, the dollar edged up as investors favoured
the greenback as a safe haven while positions in riskier
currencies and assets were cut.
The dollar index, a gauge of its performance against six
major currencies, rose a tad to 80.22 <=USD>.
The euro was little changed at $1.4010 <EUR=>, down from a
one-month peak near $1.42 hit earlier in the week, hit by hedge
fund selling before the long U.S. weekend. The dollar drifted
up 0.1 percent to 96.07 yen <JPY=>.
The Australian dollar climbed nearly 1 percent to $0.7987
<AUD=D4> after a nearly 2 percent tumbled the previous day.
The worries about the recovery outlook added fuel to gains
in government bonds.
The 10-year JGB yield <JP10YTN=JBTC> feel as much as 4
basis points to 1.320 percent, with some buying after an
enlarged auction of the maturity found solid demand on Thursday
to help pay for stimulus spending.
Japan's low yields have prompted domestic investors to go
abroad in search of higher returns.
Data from the Ministry of Finance on Thursday showed
domestic investors snapped up 1.53 trillion yen ($16 billion)
of foreign bonds in the weekend ending June 27, the biggest
such weekly purchases in four years. Analysts said those
purchases were mainly concentrated in U.S. Treasuries.
Benchmark U.S. Treasury yields are about 2.2 percentage
points above JGB yields, holding near their widest gap in eight
months and making them attractive to Japanese investors.
Japanese household investors have also been hefty buyers of
new mutual funds targetting foreign assets, keeping yen gains
in check as the money flows abroad.
