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

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S&P 500 and European futures bounce, Nikkei slips

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U.S. jobs shock leads markets to price in more rate cuts

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Dollar flat after Friday's sharp reversal

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Oil slips as OPEC+ increases production

(Updates with shares bouncing)

By Wayne Cole

SYDNEY, Aug 4 (Reuters) - Share markets found some much

needed support in Asia on Monday as the prospect of lower

borrowing costs helped soothe concerns about the U.S. economy,

though the long-term credibility of U.S. policy remained in

doubt.

A buy-the-dip mentality led to a bounce in Wall Street and

European stock futures, and allowed the dollar to stabilise

after Friday's payrolls-induced retreat.

Treasuries ran into some profit-taking after their huge

gains but fund futures still imply an 85% chance the Federal

Reserve will cut rates in September, and ease by 100 basis

points or more by this time next year.

The prospect of a shift in rates was the only silver lining

to a dire payrolls report in which downward revisions left the

three-month average of jobs growth at 35,000 from 231,000 at the

start of the year.

"The report brings payroll growth closer in line with big

data indicators of job gains and the broader growth dataset,

both of which have slowed significantly in recent months," said

analysts at Goldman Sachs.

"Taken together, the economic data confirm our view that the

U.S. economy is growing at a below-potential pace."

Neither did the reaction of President Donald Trump instil

confidence, as the firing of the head of Labor Statistics

threatened the credibility of U.S. economic data.

Likewise, news that Trump would get to fill a governorship

position at the Federal Reserve early added to worries about the

politicisation of interest rate policy.

Analysts assume the appointee will be loyal to Trump alone,

though the president did grudgingly concede that Fed Chair

Jerome Powell would probably see out his term.

"It opens the prospect of broader support on the Fed Board

for lower rates sooner rather than later," said Ray Attrill,

head of FX research at NAB.

"Fed credibility, and the veracity of the statistics on

which they base their policy decisions, are both now under the

spotlight."

Markets have essentially already eased for the Fed, with

two-year Treasury yields down almost 25 basis points

on Friday in the biggest one-day drop since August last year.

DOLLAR DENTED

The drop in global yields seemed to help equities, with S&P

500 futures and Nasdaq futures both bouncing 0.4%.

EUROSTOXX 50 futures gained 0.6%, while FTSE futures

rose 0.5% and DAX futures 0.4%.

MSCI's broadest index of Asia-Pacific shares outside Japan

firmed 0.6%, aided by a 0.8% rally in South

Korea stocks.

Japan's Nikkei fell 1.6%, in part weighed by

Friday's rebound in the yen, while Chinese blue chips

were flat.

Wall Street has taken comfort in an upbeat results season.

About two-thirds of the S&P 500 have reported and 63% have

beaten forecasts. Earnings growth is estimated at 9.8%, up from

5.8% at the start of July.

Companies reporting this week include Disney ( DIS ),

McDonald's, Caterpillar ( CAT ) and some of the large

pharmaceutical groups.

The dismal U.S. jobs data did put a dent in the dollar's

crown of exceptionalism, snuffing out what had been a promising

rally for the currency.

The dollar was a shade firmer at 147.69 yen,

having shed an eye-watering 2.3% on Friday, while the euro held

steady at $1.1583 after bouncing 1.5% on Friday.

The dollar index was pinned at 98.727, having been

toppled from last week's top of 100.250.

Sterling was restrained at $1.3282 as markets are

87% priced for the Bank of England to cut rates by a quarter

point at a meeting on Thursday.

The BoE board itself is expected to remain split on easing,

while markets still favour two further cuts by the middle of

next year.

In commodity markets, gold was flat at $3,361 an

ounce, having climbed more than 2% on Friday.

Oil prices extended their latest slide as OPEC+ agreed to

another large rise in output for September, which completely

reverses last year's cuts of 2.2 million barrels per day.

Brent dropped 0.2% to $69.51 a barrel, while U.S.

crude fell 0.1% to $67.24 per barrel.