TOKYO, July 8 — Japanese shares rose today and the dollar hit a three-year high against a basket of major currencies after US job creation accelerated in June, signalling growth in the world’s largest economy is gathering momentum.

US employers added 195,000 new jobs to their payrolls last month, beating expectations of 165,000. Adding to the positive sentiment, the figures for April and May were revised up by a combined 70,000. The unemployment rate held steady at 7.6 per cent as more people entered the workforce.

The stronger-than-expected jobs growth increases the likelihood that the US Federal Reserve will begin scaling back its US$85 billion (RM271.1 billion) a month bond-buying programme in coming months, however.

Friday’s sharp selloff in Treasuries — with the 10-year yield suffering its biggest one-day rise in nearly two years — accelerated losses that started in May over the uncertainty of the Fed’s stimulus programme.

Yields on 10-year US Treasuries, which move opposite to price, ticked up 1.3 basis points to 2.7496 per cent after they jumped 23.3 basis points on Friday, hitting their highest since August 2011, driving up US dollar borrowing costs.

“I don’t think it’s negative for Japan,” said a hedge fund manager, who declined to be identified. “For ASEAN countries, it is more of a concern if rates continue to go up. A lot of the funding for some of these countries is dollar-denominated.”

Asian shares, as measured by MSCI’s Asia-Pacific ex-Japan index eased 0.3 per cent, while Tokyo‘s Nikkei share average advanced 1.1 per cent and Australian shares dipped 0.1 per cent.

The selloff in Treasuries also weighed on Japanese government bonds today, with the 10-year yield up 2.5 basis points to 0.88 per cent.

“We believe steady improvement in labor market conditions will be enough for the Fed to start tapering its asset purchases in September,” Barclays Capital analysts wrote in a report.

The dollar was buoyed by the upbeat data. It hit a six-week high of ¥101.54 after gaining 1.2 per cent on Friday, its biggest one-day rise in a month.

Against a basket of major currencies, the dollar advanced 1.5 per cent to a three-year high.

The euro was steady at US$1.2824 but not far off a seven-week low of US$1.2806. The common currency dropped 1.4 per cent in the previous two sessions on the US jobs data and the European Central Bank‘s dovish policy guidance.

Brent crude prices added 0.2 per cent to near US$108 a barrel, extending Friday’s 2.1 per cent rise on the strong US data and concerns over Egypt‘s unrest increasing instability in the Middle East.

Copper prices was steady at below US$6,800 a metric ton (1.1023 tons) after shedding 2.3 per cent in the previous session as the dollar firmed, while gold eased 0.3 per cent, extending Friday’s two per cent decline. — Reuters