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September 25, 2017

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Positive US jobs data fails to help Asia markets

HONG KONG--Asian markets fell on Monday as concerns over the eurozone debt crisis overshadowed surprisingly good U.S. jobs data which showed unemployment close to a four-year low.

An underwhelming return for Shanghai after a week-long holiday added to the glum outlook for the day, while the euro erased gains made in New York on Friday.

Sydney eased 0.28 percent, or 12.5 points, to 4,481.9 while Seoul closed off 0.67 percent, or 13.28 points, at 1,981.89.

Hong Kong was 0.89 percent lower, shedding 187.82 points to 20,824.56, and Shanghai closed down 0.56 percent, or 11.75 points, at 2,074.42

Tokyo was closed for a public holiday.

Wall Street gave an anemic lead despite Labor Department figures showing the official jobless rate fell to 7.8 percent in September, the lowest level since President Barack Obama took office in January 2009.

The data from its establishment survey was less buoyant, showing a modest 114,000 net new jobs produced. But previous months were revised higher, underpinning the better showing in the September data.

U.S. investors initially sent shares soaring after the numbers were released before those gains were wiped out. The Dow closed up 0.26 percent, the S&P 500 ended flat and the Nasdaq eased 0.42 percent.

And while the closely watched jobs data provided some hope for the world's number one economy, the ongoing crisis in Europe continued to take its toll on sentiment.

There was a cautious tone as the European Stability Mechanism (ESM) was to launch later Monday with an inaugural board meeting, and European Union finance ministers were due to meet.

Last-minute disagreements over key ESM commitments have surfaced, with Germany, the Netherlands and Finland arguing that the fund should not be used to help banks already bailed out before it became operational.

This represents a potential blow for the likes of Ireland, which went bust after trying to keep its lenders afloat, and for Spain, which has also recapitalized some of its banks and secured 100 billion euros from its eurozone partners to do more.

There are concerns Greece will not get its next tranche of much needed bailout cash as it struggles to resolve differences with its EU, European Central Bank and International Monetary Fund creditors over its austerity budget.

And despite its parlous finances Spain continues to refuse to ask for a rescue that would also allow the ECB to enter the debt market to lower Madrid's borrowing costs.

"We saw on Friday the jobs data come out that was in line with expectations in terms of the payrolls, and U.S. unemployment ticked down ... Focus has moved back towards Europe," Jason Hughes, head of premium client management for IG Markets Singapore, told AFP.

"It looks like we're still going to have a wait-and-see approach from Spain. There isn't much pressure in the secondary bond markets at the moment to cause them to need to really act quickly," Hughes added.

Shanghai's negative return also weighed on Hong Kong dealers, with expectations dashed that a slight uptick in manufacturing activity would spur buying on the mainland.

Gold was at US$1,768.00 at 1100 GMT compared with US$1,789.90 on Monday.

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