Asian stocks retreated on Friday and the US dollar edged up after a disappointingly big drop in US employment prompted investors to pull back from commodities, resource-linked shares and higher-yielding currencies.
But the equity market decline across Asia was limited as the report showing that US companies slashed nearly half a million jobs in June did not shake hopes that a slow recovery is under way.
The Australian dollar, whose 12 per cent surge against the US dollar this year has been closely tied to the four-month rally in stocks, edged up as the US payrolls report had limited fallout.
Analysts at Rabobank said the US jobs report was a "reality check" for investors who had become overly optimistic about how quickly the global economy could recover from its deepest recession in decades.
"Share losses were limited as investors here did not necessarily take it as a sign of a further slowdown of global economies. Belief that economic fundamentals are near their bottom is still firm here," said Won Jong-hyuck, a market analyst at SK Securities in Seoul.
The MSCI index of Asia-Pacific shares outside Japan dipped 0.6 per cent and was down about 1 per cent during the first three trading days of the third quarter.
In the April-June quarter, the MSCI benchmark for Asian shares surged 32 per cent - its biggest quarterly gain since 1993 - on investor hopes that Asia's emerging economies would help lead the global economy out of the doldrums.
Japan's Nikkei average shed 1 per cent, dragged down by a 6.3 per cent slide in Seven & I Holdings when the operator of department stores and supermarkets reported an unexpected drop in quarterly profit. Shares of oil distributor Nippon Oil lost 2.6 per cent.
Asian stocks held up relatively well after the U.S. S&P 500 slid 2.9 per cent on the jobs data. US markets are closed later in the day in observance of the Independence Day holiday on Saturday.
Reuters
