Asia markets rally after US jobs report

Asian stock markets climbed in early trade on Monday, after another strong reading on US jobs creation last week provided fresh evidence the economy is recovering and reinforced expectations of a December interest rate hike.

Dealers tracked a surge on Wall Street to return to buying after Friday's sharp sell-off in Asia that was fuelled by disappointment with the European Central Bank's (ECB) revised stimulus programme.

The US Labor Department said on Friday that 211,000 jobs were created in November and the unemployment rate held at five percent.

Wall Street's three main indexes jumped more than two percent on the report.

"The post-payrolls rally in US equities was notable," Kymberly Martin, a markets strategist in Wellington at Bank of New Zealand, said in an e-mail to clients.

"The market appears to have read the data as reason for confidence in the economic outlook, rather than taking flight at the prospect of imminent reduction in US Fed stimulus."

While a lift in US borrowing costs would usually be expected to cause selling, analysts said dealers have been soothed by indications from the Fed that any increases would be small and gradual.

Among Asian stock markets Tokyo gained 1.5 percent by lunch, with exporters boosted by a weaker yen. Hong Kong put on 0.2 percent and Shanghai and Sydney each added 0.1 percent.

With the likelihood of a US rate hike almost certain the dollar pushed higher against the yen and euro, with the single currency also weighed by comments from ECB chief Mario Draghi that he could beef up its stimulus.

- Oil extends losses -

Speaking Friday after European markets closed, Draghi insisted the bank's efforts were working, adding: "There is no particular limit to how we can deploy any of our tools.

"There cannot be any limit to how far we are willing to deploy our instruments, within our mandate, and to achieve our mandate."

The euro surged more than three percent against the greenback after the ECB unveiled fresh stimulus measures that fell well short of expectations. The bank has, since earlier this year, embarked on a bond-buying scheme that in essence pumps more cash into financial markets, denting demand for the euro.

Oil prices extended losses following a hefty sell-off Friday that came after a meeting of the OPEC oil exporters' grouping ended without any decision to cut output.

At the end of its six-monthly gathering, the 12-member group dropped all talk of targets and said it would gauge the market between now and its next meeting, when Iran is due to restart exports as economic sanctions are lifted as a part of its nuclear deal.

US benchmark West Texas Intermediate crude sank 1.1 percent and Brent was 0.5 percent lower.

On Friday WTI tumbled 2.7 percent and Brent lost 1.9.

- Key figures around 0230 GMT -

Tokyo - Nikkei 225: UP 1.5 percent at 19,796.65 (break)

Hong Kong - Hang Seng: UP 0.2 percent at 22,281.19

Euro/dollar: DOWN to $1.0864 from $1.0875 late Friday

Dollar/yen: UP to 123.22 yen from 123.11 yen

New York - Dow: UP 2.1 percent at 17,847.63 (close)

London - FTSE 100: DOWN 0.6 percent at 6,238.29 (close)