* Dollar gains vs yen on jobs data, test of 100 seen
* World share gains stall in holiday-affected trade
* Commodities stronger, oil gains on Syrian tension
By Richard Hubbard
LONDON, May 6 (Reuters) - The dollar edged up against the
yen on Monday and stocks held near last week's multi-year highs
thanks to a brighter outlook for the U.S. economy generated by
last week's strong employment data.
Stock index futures pointed to a mixed day ahead for Wall
Street, though this follows steep gains on Friday in the wake of
the payrolls report that took the Dow and S&P 500 indexes to new
Brent crude oil futures hit their highest level in nearly a
month after Israeli air strikes on Syria on Friday and Sunday
highlighted risks to supplies from the Middle East.
With Tokyo and London closed for holidays, trading volumes
were generally thin across all other markets.
The main moves were in the dollar against the yen, where
Friday's U.S. jobs data eased fears of a slowdown in the world's
largest economy, setting the stage for the greenback to re-test
the 100 yen level. It rose slightly to 99.25 yen on Monday.
"The U.S. does seem to be in a cyclical recovery. It is
outperforming all the rest of the major economies globally, and
that can't be ignored," said Greg Matwejev, director of FX,
Hedge Fund Sales and Trading for Newedge.
"We've probably got a better chance at making a crack at 100
now, and I wouldn't be surprised in the coming sessions that we
do see that happen."
The dollar was up 0.2 percent at 99.25 yen by
lunchtime in Europe, extending Friday's 1-percent gain. The yen
has fallen steadily since the Bank of Japan announced a massive
plan last month to boost the Japanese economy.
U.S. employment rose more than expected in April, with
165,000 jobs created, and hiring was much stronger than thought
in the previous two months. This eased concerns raised by other
data which had pointed to the U.S. economy losing steam.
The dollar's rise was being helped by U.S. Treasury bond
yields which jumped in reaction to the jobs report. The 10-year
note yield was at 1.74 percent on Monday, having
posted its biggest single-day rise since Sept. 14 on Friday.
Further evidence of the relative outperformance of the U.S
economy emerged on Monday when a gauge of China's service
sector, which accounted for 46 percent of gross domestic product
in 2012, showed activity slowing in April.
The HSBC services Purchasing Managers' Index (PMI) fell to
51.1 in April from 54.3 in March; new orders expanded more
slowly than for 20 months and staffing levels fell for the first
time since January 2009.
Separately, an updated reading on business conditions across
the euro zone last month signaled that the debt-laden region may
be falling deeper into recession.
The Markit Eurozone Composite PMI, which gauges activity
across thousands of companies, also showed Germany is now
suffering a contraction in business activity that has long
dogged France, Italy and Spain.
"The PMI suggests that, having eased in the first quarter of
the year, the euro zone's economic downturn is likely to have
gathered momentum again in the second quarter," said Chris
Williamson, chief economist at Markit.
German Bund futures crept higher on the gloomy picture
painted of the euro zone economy by the data, with the June
contract 17 basis points up on the day at 146.32.
The euro was down 0.1 percent at $1.3104 after the
data, well below last week's two-month high of $1.3243.
Analysts said the currency could drop further after the
European Central Bank President Mario Draghi said last week that
the bank was ready to cope with the consequences of cutting its
deposit rate below the current 0.0 percent.
Such a move would effectively mean charging banks to leave
money overnight at the ECB, encouraging them to lend more and
support the recession-hit euro zone.
"The risks are now tilted to the downside for euro/dollar
and it could test $1.30," said Arne Lohmann Rasmussen, head of
FX research at Danske Bank.
The prospect of further ECB rate cuts was supporting
European stock markets, though the London holiday limited
The euro zone's blue chip Euro STOXX 50 index
was down 0.5 percent at 2,748 points, edging away from a
near-two year peak of 2,764.17 hit after the U.S. jobs data.
A rise in MSCI's broadest index of Asia-Pacific shares
outside Japan of nearly one percent, led by
gains in Australia's main share index, left the MSCI
world equity index virtually unchanged.
Commodities mostly added to their recent gains on the U.S.
jobs report but oil gained extra momentum from developments in
the Middle East.
Brent crude was up 0.4 percent to $104.60 a barrel,
after Israel's bombing near Damascus.
Israeli officials have said the raids were aimed at stopping
Lebanon's Hezbollah, like the Syrian government an ally of Iran,
from acquiring longer-range weapons. Iran has urged the region
to unite against Israel, though Israeli officials are counting
on avoiding an escalation of the conflict.
U.S. oil traded up 61 cents at $96.22, after ending Friday
with gains of around 1.7 percent.