* May US payrolls growth seen highest in 26 years on census
* Rebounding equities may find support from US jobs number
* Risks emanating from Europe still are large
By Kevin Plumberg
HONG KONG, June 4 (Reuters) - The U.S. dollar and Asian
stocks held on to recent gains on Friday ahead of a report
expected to show the highest U.S. jobs growth since 1983,
supporting a cautious shift back into riskier assets this week.
However, more than two-thirds of the forecast 513,000 new
jobs will likely be temporary hires for the government census,
giving mixed signals to investors eager to take profits on
their bullish bets on the dollar, which hit a four-year high
against the euro on Tuesday. []
Global equity markets and U.S. Treasury yields roughly over
the past week have both recovered nearly a quarter of the
losses incurred over the last two months when the European
sovereign debt crisis triggered a scramble out of risk.
The U.S. payrolls report may provide a supportive role to
this rebound.
"There is talk of 600,000 jobs being added and that kind of
number will show that the U.S. economy is showing considerable
momentum," said Tony Morriss, senior currency strategist at ANZ
in Sydney.
Still, fears about tougher funding conditions in Europe and
the impact of spartan fiscal policy on growth may keep a heavy
lid on the nascent revival in risk taking.
Indeed, Hungary's ruling party on Thursday said the
country's finances were in much worse shape than previously
expected, an echo of recent warnings from Greece.
[]
The euro was largely unchanged from late on Thursday in New
York at $1.2175 <EUR=>, still trying to climb from an overnight
low of $1.2150.
The dollar was up 0.2 percent against the yen to 92.74 yen
<JPY=>. Speculation that Japan's next prime minister will be
much more hawkish against yen strength has spurred traders to
cut their bets on the yen this week.
The ruling party will vote on a new prime minister on
Friday, with current Finance Minister Naoto Kan expected to
win. []
In equity markets, the MSCI index of Asia Pacific stocks
outside Japan edged down 0.5 percent <.MIAPJ0000PUS>, weighed
mostly by profit taking in the materials sector after a surge
on Thursday.
The index is trading at 12 times forecast 12-month
earnings, the lowest valuation since March 2009, when the
latest bull market began. That kind of value is probably enough
to pull some investors back into the market, though uncertainty
over Europe could keep intraday volatility high.
Japan's Nikkei share average <> trimmed early gains to
trade unchanged on the day. Shares of retailers were the
biggest drag on the index, while exporters and technology
sector stocks offered support.
The prospect of a new prime minister that would keep the
yen weak was seen as a plus for exporters, though it was still
too early to drive trading consistently.
"There's still a lot that's unknown -- who will be in the
cabinet, what the policies will be. That makes it hard for the
market to take it up as a factor," said Yutaka Miura, senior
technical analyst at Mizuho Securities in Tokyo.
U.S. crude for July delivery slipped 0.4 percent to $74.32
a barrel <CLc1>. Oil is down nearly $12 in the last month.
(Additional reporting by Elaine Lies in TOKYO and Anirban Nag
in SYDNEY; Editing by Kazunori Takada)
