* European shares at one-month low before U.S. jobs data
* Gov't bonds in Europe gain on talk of Japanese buyers
* Yen pares losses vs dlr after hitting 3-1/2 year low
* Nikkei jumps more than 4 pct, highest since August 2008
By Richard Hubbard
LONDON, April 5 (Reuters) - European shares hit a one-month
low on Friday as investors fretted about U.S. jobs data later in
the day and sold airline stocks on fears of a bird flu outbreak
in Asia, while euro zone bonds gained on talk of Japanese
Traders have become increasingly nervous about the prospect
of a weaker than expected U.S. non-farm payrolls report for
March, due out at 1230 GMT, after disappointing data this week
on manufacturing activity and private sector hiring.
The FTSEurofirst 300 index of Europe's top
companies was down 1.5 percent at 1,163.40, a one-month low,
after falling 1.1 percent in the previous session. It is still
up about 2.5 percent so far this year, however.
"Recent weakness in global economic data has certainly
spooked investors and prompted them to stay very cautious," said
Philippe Gijsels, head of research at BNP Paribas Fortis Global
Markets. "If U.S. jobs data turns out to be weaker than
anticipated, it would certainly add to already jittery
London's FTSE 100, Frankfurt's DAX and
Paris's CAC-40 were up to 1.7 percent lower.
A drop of around 0.6 percent in U.S. stock futures suggests
a lower start on Wall Street, although much depends on the jobs
data which comes out before the market opens.
An improving U.S. economic growth trend has encouraged
investors to take on more risk this year, although any signs of
weakness would also encourage hopes that the Federal Reserve
will sticks to its massive bond-buying programme.
The payrolls report is expected to show employers added
200,000 jobs last month, below the 236,000 created in February,
leaving the unemployment rate steady at 7.7 percent, according
to a Reuters poll of economists.
Reports of a new strain of bird flu in China and escalating
tension on the Korean peninsula also weighed on equities, and
earlier sent MSCI's broad index of Asia-Pacific shares outside
Japan down 1.1 percent to a three-month low.
In Europe, the STOXX 600 Travel and Leisure index
fell 3.1 percent and was the worst-performing European sector.
Airline stocks were particularly hard hit by fears about the
effect on demand for flights to Asia.
Effects were still being felt from Thursday's radical
overhaul of Japanese monetary policy by new central bank
governor Haruhiko Kuroda, which will see $1.4 trillion injected
into the economy to end decades of deflation.
Yields on Dutch, Belgian and Austrian bonds all fell to
record lows, with market participants pointing to expectations
of strong demand from Asia. In Tokyo, yields on the 10-year
Japanese government bond (JGB) fell as much as 12
basis points to a record low of 0.315 percent.
"There've been stories of life (assurance) companies
switching out of JGBs overnight in search of yield, potentially
into European bonds," said Philip Tyson, a strategist at ICAP.
The Dutch 10-year yield sank 4 basis points to 1.44 percent
as investors opted for euro zone assets that carry
higher yields than German Bunds but boast strong credit ratings.
French 10-year bond yields sank 7 basis points to
1.81 percent, the lowest on record.
The preference for euro zone bonds offering a pick-up over
Germany comes as German borrowing costs fell to eight-month lows
on Thursday after the European Central Bank said it was ready to
act to boost the region's economy.
U.S. 10-year Treasury debt yields hit their lowest level in
three months on the speculation of a rise in Japanese investor
demand for foreign debt. The 10-year T-note yield touched a low
of 1.744 percent.
The yen staged a small recovery against the dollar after
falling a hefty 3.6 percent on Thursday, as investors and
speculators began to book profits when it touched a 3-1/2 year
low of 97.20 to the dollar.
The Japanese currency settled around 96.20 yen, up around
0.15 percent on the day and leaving the dollar with gains of
about 11 percent against the yen this year.
Against the euro, the yen was about 0.25 percent firmer at
124.30 following losses of 4.3 percent on Thursday, its biggest
one-day fall against the common currency since November 2008.
Earlier the Nikkei share average jumped as much as 4.7
percent, extending Thursday's 2.2 percent rise and breaking
through 13,000 points for the first time since August 2008.
In the oil market Brent crude was close to a five-month low
around $106 per barrel on Friday as the bleaker U.S.
data this week and signs of a surge in inventories dimmed the
outlook for fuel demand. Brent was down 3.4 percent, its biggest
weekly fall since December, and U.S. crude down 4.3 percent
, its sharpest drop since September.
Copper was also weak and not far from eight-month lows on
the London Metal Exchange, where it traded around $7,425 a tonne
. "Commodity markets are telling us the real story, and
that is there is simply no demand out there," said Jonathan
Barratt, chief executive of commodity research firm Barratt's