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

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Nikkei futures point to 2,000 point bounce

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S&P 500 futures rise 0.9%, Nasdaq up 1.1%

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Yen off highs, dollar up 0.8% at 145.24 yen

By Wayne Cole

SYDNEY, Aug 6 (Reuters) - Asian share markets were

hoping for a relief rally on Tuesday as futures pointed to an

opening bounce on the hard-hit Nikkei and central bank officials

said all the right things to soothe market nerves.

Nikkei futures were trading at 33,640, suggesting the

cash market could open around 2,000 points higher from its

31,458 close on Monday. The index had shed 12.4% in its worst

selloff since the 1987 Black Monday crash.

Wall Street also looked steadier with S&P 500 futures

rebounding 0.9% in early trade, while Nasdaq futures rose

1.2%. The S&P 500 had lost 3.00% over Monday, with the

Nasdaq Composite down 3.43%.

"After the breathtaking and historic moves seen across Asian

markets yesterday, driven predominantly by a significant

liquidation of margin positions, we look for a solid counter

rally on open today," said Chris Weston, head of research at

broker Pepperstone.

However, he cautioned that the level of implied volatility

for the Nikkei was at a stratospheric 70%, suggesting fireworks

were likely for some time yet.

"After such a furious shake-out of leveraged positioning,

with Japanese banks absolutely taken to the cleaners, it will

take the bravest of investors to buy with any conviction."

Currencies were also calmer as the dollar edged up to 144.24

yen, having sunk 1.5% on Monday to as deep as 141.675.

The yen has shot higher in recent sessions as investors were

squeezed out of carry trades, where they borrowed yen at low

rates to buy higher yielding assets.

The dollar pared its losses on the safe-haven Swiss franc,

holding at 0.8526 francs from a low of 0.8430.

"The fact that there was such a strong unwind in the

dollar/yen, in turn forced investors to take some profits where

they've been hiding out this year, which has been mostly big

tech," said Kevin Gordon, senior investment strategist at

Schwab.

"It's become the biggest target because it was the best

performer and that's probably the easiest spot for traders to

take their profits."

Treasury yields had also come off their lows, in part in

reaction to a rebound in the U.S. ISM services index to 51.4 for

July. In particular, it employment index jumped 5 points to

51.1, suggesting last week's payrolls report may have overstated

the weakness in the labour market.

Yields on 10-year Treasury notes were back at

3.804%, having been as low as 3.667% at one stage.

Federal Reserve officials did their best to reassure markets

with Fed San Francisco President Mary Daly saying it was

"extremely important" to prevent the labor market tipping into a

downturn.

Daly added that her mind was open to cutting interest rates

as necessary and policy needed to be proactive.

The comments underpinned market expectations that the Fed

would cut by 50 basis points at its September meeting, with

futures implying an 87% chance of such an outsized move.

The market has around 115 basis points of easing priced in

for this year, and a similar amount for 2025.

In precious metals, gold failed to get a safe haven bid amid

talk investors were taking profits to cover losses elsewhere.

Spot gold stood at $2,409 an ounce after losing

1.52% overnight.

In energy markets, oil prices bounced early Tuesday as news

that several U.S. personnel were injured in an attack against a

military base in Iraq stoked fears of a wider conflict.

U.S. West Texas Intermediate crude futures CLc1 climbed

$1.18, or 1.6%, to $74.12 per barrel.