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Two more Fed cuts expected this year after weak ADP jobs

report

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U.S. government shutdown lifts demand for safe-haven gold,

bonds

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Oil pauses 3-day slide on prospect of tighter Russia

sanctions

By Kevin Buckland

TOKYO, Oct 2 (Reuters) - Tech shares rallied on

Thursday, driving Asia stock indexes higher, while gold hovered

near a record high and the dollar languished as a weak U.S.

labour market report bolstered bets for Federal Reserve interest

rate cuts.

The U.S. government shutdown made it a near certainty that

crucial monthly payrolls data won't be released on Friday, but

overnight the private ADP employment report showed the economy

unexpectedly shed jobs in September, with the prior month also

revised to a decline.

Even without the benefit of official labour data, the dismal

ADP report had traders pricing in quarter-point Fed rate cuts at

each of the two remaining policy meetings of the year as almost

a done deal.

The promise of an easier policy environment helped lift Wall

Street to fresh record highs on Wednesday, and the Philadelphia

SE semiconductor index climbed more than 2%.

Chip sector shares were prominent in leading Japan's Nikkei

to gains of about 0.5%.

Taiwan's tech-heavy bourse jumped 1.5%, while South

Korea's KOSPI shot up 2.8% after chip heavyweights

Samsung and Hynix inked partnerships to supply OpenAI data

centres.

Hong Kong's Hang Seng added 0.5%.

The ADP report "suggests the U.S. economy is in almost dire

need for further policy support," and as a result, "the markets

are discounting a much higher probability of rate cuts in

October and December," said Kyle Rodda, an analyst at

Capital.com.

Meanwhile, "after some initial jitters, the markets shrugged

off the U.S. government shutdown, at least for now," he added.

"Historically, the impact of shutdowns has been trivial,"

although "the delay of critical economic data could increase

uncertainty about the path forward for U.S. monetary policy -

and therefore lift volatility," Rodda said.

The government shut down much of its operations on Wednesday

as deep partisan divisions prevented Congress and the White

House from reaching a funding deal, setting off what could be a

long, gruelling standoff.

The combination of Fed easing bets and some shutdown angst

pushed gold to a fresh all-time high of $3,895.09

overnight, while also supporting U.S. Treasuries, sending yields

sharply lower.

The two-year Treasury yield sank to a two-week

low of 3.531% on Thursday in Tokyo trading hours.

Gold paused for breath, last changing hands at around

$3,865.

The U.S. dollar index, which tracks the currency

against six major peers, languished near the one-week low of

97.459 reached overnight. It last stood at 97.672, slightly down

from Wednesday's closing level.

The dollar was little changed at 147.01 yen,

following a 1.8% three-day tumble.

The euro rose slightly to $1.1738, and sterling

also ticked up to $1.34835.

Oil prices edged higher on prospects of tighter sanctions on

Russian crude, looking to snap a three-day losing streak to

16-week lows.

Brent crude futures gained 0.2% to $65.50 a barrel,

and U.S. West Texas Intermediate crude rose 0.2% to

$61.92 a barrel.