Asia shares track Wall Street higher, dollar becalmed

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MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS inched up 0.3 percent, with Australia ahead by 0.5 percent.

Japan's Nikkei .N225 rose 0.7 percent in the wake of a firmer finish on Wall Street. Japanese Prime Minister Shinzo Abe meets U.S. President Donald Trump on Feb. 10 and 11, with trade and currencies likely to be on the agenda.

Attendees clap during a ceremony marking the end of trading in 2016 at the Tokyo Stock Exchange (TSE) in Tokyo, Japan December 30, 2016. REUTERS/Toru Hanai

Dealers were still absorbing Friday's surprise move by China's central bank to raise short-term interest rates.

While the increases were modest, they suggested Beijing was intent on both containing capital outflows and reining in risks to the financial system created by years of debt-fuelled stimulus.

It was the first move in the repo rate since October 2015.

"This change is ground-breaking and suggests that the central bank will change onshore rates more frequently," wrote analysts at ANZ in a note. "The bottom line is to prevent a cash crunch amidst deleveraging and deflating financial bubbles in certain sectors."

On Wall Street, banks had ended Friday strongly as President Donald Trump moved to roll back regulations intended to prevent a repeat of the global financial crisis.

JP Morgan Chase (JPM.N) shares closed up 3.1 percent and helped push the S&P bank index .SPXBK up 2.6 percent. The Dow .DJI rose 0.94 percent, while the S&P 500 .SPX gained 0.73 percent and the Nasdaq .IXIC 0.54 percent.

Friday's payrolls data also showed U.S. jobs jumped more than expected in January as construction firms and retailers ramped up hiring, but wages growth still slowed.

"All in all a very mixed payroll report, with the breakdown tending to validate the latest Fed message of a gradual tightening and no need to rush into a hike at the next meeting," said Deutsche Bank's global head of forex Alan Ruskin.

"This data plays to the idea that there may be an extended gestation period both for easier U.S. fiscal policy and tighter monetary policy."

Fed fund futures <0#FF:> show only a slim chance of a hike in March and a Reuters poll of primary dealers found none expected a move before the second quarter.

That cautious outlook kept the dollar was marginally softer at 112.55 yen JPY= having lost 2.3 percent last week in its worst weekly performance since late July.

The euro was a fraction firmer at $1.0782 EUR= while the dollar dipped against a basket of currencies to 95.720 .DXY.

In the commodities market, spot gold XAU= was 0.1 percent higher around $1,221.00 an ounce.

Oil prices edged up after the United States imposed sanctions on some Iranian individuals and entities, days after the White House rebuked Tehran for a ballistic missile test.

U.S. crude futures CLc1 added 7 cents to $53.90, while Brent LCOc1 gained 8 cents to $56.89 a barrel having rallied 2 percent last week. [O/R]