Asian shares crept up on Monday with expectations rising that weak U.S. jobs data would prompt the Federal Reserve to announce fresh stimulus and Europe will make further progress in its debt crisis management this week, overshadowing soft Chinese data.
Trade data released on Monday showed China's exports in August grew slightly less than expected from a year ago while imports slumped, wrongfooting forecasts of a rise, and suggesting weak domestic demand.
It followed news showing industrial output slowed in August while fixed asset investment grew strongly, underscoring the importance of infrastructure spending to economic growth.
Rising consumer inflation, however, suggested scope for easier monetary stimulus may be narrowing.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.2 percent after adding as much as 0.5 percent to a two-week high.
But Japan's Nikkei average underperformed with a 0.1 percent drop, as a firmer yen weighed on exporters.
Shanghai copper jumped 2.6 percent to hit a four-month high at 58,130 yuan, boosted by global stimulus hopes and China's approval of a multibillion dollar infrastructure drive.
Local media also reported on Sunday China will provide subsidies worth $2.2 billion to buyers of energy-efficient computers and air-conditioners.
"Economic fundamentals are sluggish but concerns about weak demand from China are outweighed by expectations that bad data would spur further monetary easing and other stimulus steps to bolster growth, supporting commodities generally," said Hiroyuki Kikukawa, general manager at trading company Nihon Unicom.
U.S. nonfarm payrolls grew by 96,000 in August, sharply below the 125,000 forecast, and the jobless rate edged down to 8.1 percent although the fall largely reflected a drop in the participation rate.
While the data increased bets for the Fed to announce another round of bond buying or quantitative easing (QE) at its September 12-13 policy meeting, experts remained divided over whether the Fed would see the job growth as sufficiently sluggish to spur an aggressive easing such as QE.
"We believe extended rate guidance is almost a given, while QE3 is a...coin toss," Morgan Stanley analysts said in a note.
The dollar index hovered near its four-month lows and the dollar traded at 78.20 yen, near the five-week trough of 78.02 plumbed on Friday.
"At a minimum, we expect the FOMC to extend its forward guidance on rates at next week's meeting, although there is a strong likelihood it will deliver even more," Amber Rabinov at ANZ Research said, referring to the period of the Fed's commitment to keep rates near zero, which currently stands at least through late 2014.
U.S. crude futures waere off 0.2 percent at $96.21 a barrel but Brent steadied at $114.30.
Spot gold was up 0.1 percent to $1,737.84 an ounce, nearing Friday's peak of $1,741.30, its highest since February 29.
Money managers, including hedge funds and other large speculators, raised their bullish bets in gold and silver to their largest holding since March on expectations of interest rate easing measures by major central banks.
Improved investor sentiment kept Asian credit markets steady, with the spread on the iTraxx Asia ex-Japan investment-grade index pinned near its tightest in six months.
Eventful week for Europe
The euro eased 0.2 percent to $1.2787, after rallying more than 1 percent on Friday to a four-month high of $1.2815.
"You might get an acceleration if we do get QE3," said Andrew Robinson, FX analyst for Saxo Capital Markets in Singapore, referring to the euro's outlook.
Markets surged broadly on the European Central Bank's announcement last week to launch a new and potentially unlimited bond-buying programme, focused on short-dated bonds in countries implementing approved fiscal austerity measures.
The International Monetary Fund and European Commissioner for Economic and Monetary Affairs Olli Rehn threw their support behind the scheme while ECB executive board member Benoit Coeure said countries that apply for the bond-buying scheme will not necessarily be asked to make more cuts.
"Although ECB president Draghi's bond-purchase program may not be a direct solution to Europe's high debt/low growth problem, it buys invaluable time for national governments to pursue their austerity policies by keeping yields in check and equities supported," said Ashraf Laidi, chief global strategist at City Index, in a note.
Key events for Europe this week include a September 12 ruling by Germany's constitutional court on the new euro zone bailout fund. Financial market prices suggest investors expect the court to back the fund, which would pave the way for aiding countries faced with high borrowing costs such as Spain.
Madrid intends to discuss conditions attached to the ECB's bond-buying plan with euro zone finance ministers this week. A European Union finance ministers meeting is set for September 14-15.
Global lenders, returning to Athens to assess Greece's austerity reforms before granting its latest bailout which is crucial to keeping the country afloat, have rejected parts of a nearly 12-billion-euro package prepared by the government.
