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Asian stock markets: https://tmsnrt.rs/2zpUAr4

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Nikkei slips, S&P futures weighed by risk-off mood

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Dollar down before jobs data, steel levies deadline

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ECB seen cutting rates, BoC on hold

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Oil bounces on relief OPEC did not raise output even

further

(Adds Beijing comments, updates prices)

By Wayne Cole

SYDNEY, June 2 (Reuters) - Asian share markets and the

dollar made a soft start on Monday as U.S.-China trade tensions

continued to simmer, while investors turned defensive ahead of

key U.S. jobs data and a widely expected cut in European

interest rates.

There was little obvious reaction to President Donald

Trump's threat late Friday to double tariffs on imported steel

and aluminium to 50%, beginning on June 4, a sudden twist that

drew the ire of European Union negotiators.

Speaking on Sunday, Treasury Secretary Scott Bessent said

Trump would soon speak with Chinese President Xi Jinping to iron

out a dispute over critical minerals.

Beijing then forcefully rejected Trump's trade criticism,

suggesting a call might be some time coming.

White House officials also continued to play down a court

ruling that Trump had overstepped his authority by imposing

across-the-board duties on imports from U.S. trading partners.

"The court ruling will complicate the path ahead on trade

policy, but there remains an ample set of provisions available

to the administration to deliver its desired results," said

Bruce Kasman, chief economist at JPMorgan.

"There is a commitment to maintaining a minimum U.S. tariff

rate of at least 10% and imposing further sector tariff

increases," he added. "An increase in ASEAN to discourage

transhipment looks likely, and the bias for higher tariffs on

U.S.-EU trade persists."

Markets will be particularly interested to see if Trump goes

ahead with the 50% tariff on Wednesday, or backs off as he has

done so often before.

In the meantime, caution reigned and MSCI's broadest index

of Asia-Pacific shares outside Japan went flat.

Japan's Nikkei fell 1.4%, while Hong Kong dropped

2.5%.

South Korean stocks edged up 0.2% on hopes a snap

presidential election on Tuesday would deliver a clear winner.

EUROSTOXX 50 futures dipped 0.2%, while FTSE

futures and DAX futures were little changed.

S&P 500 futures eased 0.4% and Nasdaq futures

lost 0.5%. The S&P had climbed 6.2% in May, while the Nasdaq

rallied 9.6% on hopes final import levies will be far lower than

the initial sky-high levels.

Front-running the tariffs has already caused wild swings in

the economy, with a contraction in the first quarter likely

turning into a jump this quarter as imports fall back.

The Atlanta Fed GDPNow estimate is running at an annualised

3.8% for April-June, though analysts assume this will slow

sharply in the second half of the year.

Data this week on U.S. manufacturing and jobs will offer a

timely reading on the pulse of activity, with payrolls seen

rising 130,000 in May while unemployment stays at 4.2%.

EYEING UNEMPLOYMENT

A rise in unemployment is one of the few developments that

could get the Federal Reserve to start thinking of easing policy

again, with investors having largely given up on a cut this

month or next.

A move in September is seen at around a 75% chance, though

Fed officials have stopped well short of endorsing such pricing.

There are at least 11 Fed speakers on the diary for this week,

led by Fed Chair Jerome Powell later on Monday.

Fed Governor Christopher Waller did say on Monday that cuts

remain possible later this year as he saw downside risks to

economic activity and employment and upside risks to inflation

from the tariffs.

A softer jobs report would be a relief for the Treasury

market, where 30-year yields continue to flirt with the 5%

barrier as investors demand a higher premium to offset the

ever-expanding supply of debt.

The Senate this week will start considering a

tax-and-spending bill that will add an estimated $3.8 trillion

to the federal government's $36.2 trillion in debt.

Across the Atlantic, the European Central Bank is considered

almost certain to cut its rates by a quarter point to 2.0% on

Thursday, while markets will be sensitive to guidance on the

chance of another move as early as July.

The Bank of Canada meets Wednesday and markets imply a 76%

chance it will hold rates at 2.75%, while sounding dovish on the

future given the tariff-fuelled risk of recession there.

Widening rate spreads have so far offered only limited

support to the U.S. dollar.

"The greenback remains near the lower end of its post-2022

range and considerably weaker than interest rate differentials

would imply," noted Jonas Goltermann, deputy chief markets

economist at Capital Economics.

"Sentiment around the greenback remains negative and it

continues to look vulnerable to further bad news on the fiscal

and trade policy fronts."

On Monday, the dollar slipped 0.3% on the yen to 143.55

, while the euro edged up 0.2% to $1.1370.

The greenback even fell 0.2% on the Canadian dollar to

1.3727, getting no tailwind from Trump's threat of 50%

tariffs on Canadian steel exports.

In commodity markets, gold firmed 0.6% to $3,310 an ounce

, having lost 1.9% last week.

Oil prices bounced after OPEC+ decided to increase output in

July by the same amount as it did in each of the prior two

months, a relief to some who had feared an even bigger increase.

Brent rose $1.60 to $64.38 a barrel, while U.S.

crude gained $1.74 to $62.53 per barrel.