* Ex-Japan Asia MSCI edges up after strong Q1 gains
* Strong economic growth underpin Asian stocks
* Investors nervous Trump may take protectionist steps
* European shares seen steady to slightly higher
By Hideyuki Sano
TOKYO, April 3 Asian shares started the week
modestly higher on Monday after a bumper quarter as investors
look to the shape of U.S. trade and economic policies and how
they could affect global growth.
European shares are seen steady, with spread-betters
expecting Germany's DAX and Britain's FTSE
opening less than 0.1 percent higher.
MSCI's broadest index of Asia-Pacific shares outside Japan
rose 0.2 percent, while Japan's Nikkei
gained 0.8 percent after hitting a seven-week low on Friday.
Ex-Japan Asia MSCI had gained 12.3 percent in the last
quarter, its biggest quarterly gain in 6-1/2 years and almost
double the 6.4 percent rise in MSCI's broadest gauge of the
world's stock markets covering 46 markets.
The rally was primarily underpinned by signs of a pickup in
momentum in the global economy, led by China.
South Korea's trade data for March released over the weekend
added to the evidence of improving global demand, with exports
rising more than expected.
While a private survey on China's manufacturing on Saturday
came in below market expectations it still showed a healthy
expansion after a similar survey by the government on Friday
pointed to strong growth in the sector.
"The Chinese economy is likely to stay firm at least until
the Communist party congress (later this year). The hi-tech
sector is doing well, supporting Korean and Taiwanese shares,"
said Yukino Yamada, senior strategist at Daiwa Securities.
In Japan, the Bank of Japan's tankan survey showed that
business sentiment improved, albeit slightly less than expected.
The main focus for markets this week centres on U.S. payroll
figures on Friday and U.S. President Donald Trump's first
meeting with counterpart Xi Jinping on Thursday and Friday.
"If we get strong reading in U.S payrolls data, the markets
will try to price in a rate hike in June," said Minori Uchida,
chief currency strategist at the Bank of Tokyo-Mitsubishi UFJ.
Markets are currently pricing in around 60 percent chance of
another rate rise in June, with a full chance price in by
On the other hand, investors are on guard for the
possibility the U.S. administration may adopt protectionist
In a tweet on Thursday, Trump said he expected the meeting
with Xi "will be a very difficult one."
On Friday, Donald Trump sought to push his crusade for fair
trade and more manufacturing jobs back to the top of his agenda
by ordering a study into the causes of U.S. trade deficits and a
clampdown on import duty evasion.
And on Sunday, Trump held out the possibility of using trade
as a lever to secure Chinese cooperation against North
The executive orders came a week after Trump's promise to
replace Obamacare imploded in Congress, adding to concerns he
may struggle to pass highly-anticipated tax cuts and
infrastructure spending bills.
"After his failure to push through his healthcare reforms,
investors increasingly think that his tax reforms will take
time. And given the China-U.S. summit, trade issues could come
to the fore this week," said Masahiro Ichikawa, senior
strategist at Mitsui Sumitomo Asset Management.
Any hints that Washington may name some of its trade
partners such as China, Japan and Germany, as currency
manipulators could dent the dollar. The U.S. Treasury will
release its next currency report on April 15.
"The Trump administration is not necessarily seeking to
reduce the trade deficit through a cheaper dollar. But it has
strong intentions to do that and it could use a weaker dollar as
a bargaining tool in trade negotiation," said Uchida of the Bank
of Tokyo-Mitsubishi UFJ.
The dollar was almost flat at 111.43 yen, keeping
some distance from its four-month low of 110.11 touched a week
The euro ticked up 0.3 percent to $1.0679, recovering
from Friday's two-week low of $1.0651 hit after data had shown
inflation in the currency bloc had slowed by far more than
expected in March.
Oil prices stood near three-week highs on a growing sense
that OPEC and nonmember Russia would extend their production
cut, seeking to drive the market higher, though high U.S. rig
count capped their advance.
Brent crude futures hit a three-week high of $53.63
per barrel early on Monday and last stood at $53.41, down 0.2
percent from U.S. close.
U.S. West Texas Intermediate crude futures was little
changed at $50.53 a barrel.
(Editing by Shri Navaratnam and Kim Coghill)