Japanese shares rebounded strongly on Monday, tracking a rally in global equities, as U.S. jobs data was solid but not strong enough to spawn new worry about near-term tapering of the Federal Reserve's stimulus, while weak China data hit copper.
Markets regained some stability after high volatility the past two weeks. They had been hit by concerns the Fed will weaken a stimulus commitment that's boosted risk appetites, and then by speculation Friday's jobs data would disappoint and cause worries about the U.S. economy.
Analysts and traders now will look at coming U.S. data for clues over the timing of the potential tapering and at the Bank of Japan's policy meeting this week for any signs of further stimulus after a recent plunge in Japanese stocks and a sharp rise in the yen spooked investors.
The jobs data "didn't suggest an imminent tapering, but it still pointed to the direction of the Fed scaling back its quantitative easing at some point, leaving an element of uncertainty," said Ayako Sera, senior market economist at Sumitomo Trust Bank in Tokyo.
"U.S. retail sales this week and more upcoming data could spur further price adjustments as they will likely help converge market views on the outlook for Fed policy," she said.
U.S. nonfarm payrolls rose slightly more than forecast, boosting U.S. and European stocks and the dollar. But Treasury prices fell as the debt market focused on views that if U.S. labour conditions continued to improve, it would prompt the Fed to scale down on its monthly buying of $85 billion in Treasuries and mortgage-backed securities later this year.
MSCI's broadest index of Asia-Pacific shares outside Japan , which shed 1.07 percent on Friday before the jobs data came out, was flat on Monday.
South Korean shares rose 0.5 percent, after sliding 1.8 percent on Friday, the biggest daily percentage fall in nearly 11 months.
Markets in Australia and China are closed on Monday for holidays.
London copper fell to its lowest since mid-May on Monday while the commodity-sensitive Australian dollar dropped more than 1 percent to a low of $0.9393, its lowest in 20 months, before recovering to $0.9410. The Aussie was hit by China data over the weekend that showed unexpected weakness in May trade and domestic activity struggling to pick up.
Chinese imports fell 0.3 percent against expectations for a 6 percent rise as the volume of major metals imports, including copper and alumina, fell at double-digit rates. Coal imports fell sharply.
"The China train is hardly derailing, but it does seem to be running out of puff somewhat for the moment," wrote ANZ Bank.
Analyst Sijin Cheng at Barclays Capital in Singapore said the firm has lowered its China's growth forecast for this year to 7.4 percent from 7.9 percent.
The U.S. dollar extended its gains against the yen to above 98 yen earlier on Monday, having briefly fallen below 95 to a fresh two-month low on Friday and giving up all gains made since the Bank of Japan's unprecedented stimulus unveiled on April 4. The yen selling last month lifted the U.S. currency to a 4-1/2-year peak against the yen of 103.74.
The dollar's rebound soothed sentiment for the Japanese stock market. The Nikkei average soared 3.7 percent, after shedding as much as 2.8 percent on Friday, which temporarily pushed the index into bear market territory, losing 20 percent from a 5-1/2 year high two weeks earlier.
The Nikkei had taken a heavy beating partly due to concerns Prime Minister Shinzo Abe cannot meet expectations, which has dented over-optimism about his government's stimulus measures.
Abe said on Sunday the government would decide on tax cuts in the autumn to encourage companies to boost capital expenditure as part of sweeping reforms to revive the economy after nearly two decades of stagnation. The measures would add to a series of steps the government unveiled in a draft of its growth strategy last week.
In a fresh sign Japan's aggressive policies to stimulate growth are paying early dividends, its current account surplus doubled in April from a year earlier, and bank lending posted its biggest annual rise in more than three years.
The BOJ, kicking off its two-day policy meeting on Monday, may take further steps this week to curb volatility in the government bond market.
U.S. crude futures were up 0.1 percent at $96.14 a barrel while Brent also inched up 0.1 percent to $104.68.