Asia sags as China stocks wobble after trading resumes

TOKYO - Asian stocks sagged on Monday, with risk sentiment dampened as Shanghai shares wobbled after the Chinese markets resumed trading following a four-day long weekend. MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.7 percent. The index had already dropped earlier in the session following Friday's Wall Street slide, triggered after the August U.S. jobs report failed to give a clear view on the Federal Reserve's interest rate hike. Japan's Nikkei lost 0.4 percent while South Korea's Kospi dipped 0.1 percent and Australian stocks shed 0.7 percent. Chinese stocks once again took centre stage after their markets returned from the holidays, having been closed on Thursday and Friday as Beijing celebrated 70 years since World War Two's end. Shanghai shares initially rose as much as 1.8 percent following remarks over the weekend by regulators aimed at calming the market, but the relief proved short lived and the index was down 0.1 percent as of 0245 GMT. U.S. stock indexes dropped more than 1 percent on Friday after a mixed August jobs report did little to quell investor uncertainty about whether the Federal Reserve will hold off from hiking interest rates this month. Nonfarm payrolls increased 173,000 last month, fewer than the 220,000 that economists polled by Reuters had expected. But the unemployment rate dropped to 5.1 percent, its lowest in more than seven years, and wages accelerated. "The jobs report itself was good. The U.S. economy is recovering, and it should be good for the Japanese economy if we didn't have worries about China," said Yoshihiro Okumura, an analyst at Chibagin Asset Management in Tokyo. Underlining concerns about the health of the world's second largest economy, China revised its annual economic growth rate in 2014 to 7.3 percent from the previously released figure of 7.4 percent on Monday. Previously strong expectations that the Fed will tighten this month have weakened somewhat on the global markets turmoil and emerging worries over China's economy with its potential impact on global growth. The dollar was on the back foot against its peers with Friday's U.S. jobs data inadequate to give a definitive clue to the Fed's rate hike timing. The U.S. stood at 119.30 yen after sliding from a peak of 120.19 on Friday. The euro rose 0.2 percent to $1.1155 following up an overnight bounce from a low of $1.1090. Marc Chandler, global head of currency strategy at Brown Brothers Harriman in New York, reckoned the dollar could slip back to 118 yen, if not a little further. "With steep equity losses before the weekend, and the prospects of more volatility from China, which re-opens after being closed September 3-4, leaves the dollar vulnerable to additional losses," he wrote. "These concerns likely outweigh the prospects of additional easing by the Bank of Japan, which many continue to see as likely as early as next month." The dollar index, a gauge of the greenback's strength against a basket of key currencies, was little changed at 96.215 after losing 0.2 percent overnight. The Australian dollar, used as a liquid proxy of China trades, fell to a fresh 6-1/2-year low of $0.6892 early on Monday. Investors have been aggressive sellers of the Aussie in recent weeks, in large part due to heightened concerns about a hard landing for the Chinese economy. China is Australia's top export market. In commodities, crude oil extended losses from Friday, when they fell on lingering supply glut woes and Wall Street losses. [O/R] U.S. crude oil futures were down 0.8 percent at $45.67 a barrel. The contracts had hit a 6-1/2-year low of $37.75 a barrel in late August when global growth worries pummelled the market. -Reuters