GLOBAL MARKETS-Aussie shares vault 5-year high, dollar pinned near 8-mth low

Reuters

* Australian shares gain 0.6 pct, hit 5-year highs

* Asian shares rise to 5-month high, Nikkei up 0.7 pct

* Dollar stays on back foot as Fed expected to delay taper

* European shares seen opening flat to slightly higher

* All eyes on Sept U.S. jobs report, due on Tuesday

By Dominic Lau

TOKYO, Oct 21 (Reuters) - Australian shares climbed to a

five-year peak on Monday, drawing confidence from another record

high on Wall Street as investors bet the Federal Reserve will

put off winding back its cheap money policies until next year.

Many analysts think the Fed will be wary of scaling back its

$85 billion-a-month bond-buying programme until the economic

impact of a 16-day partial shutdown of the U.S. government is

clearer. This view kept the dollar on the defensive.

Investors face a deluge of U.S. data this week as reopened

government departments catch up on their work, with Tuesday's

September nonfarm payrolls report seen as the most important.

U.S. employers are expected to have taken on 180,000 workers

last month, with the unemployment rate steady at 7.3 percent, a

Reuters poll showed.

"Such strong readings would again ignite a debate on an

imminent start of U.S. tapering, but given that the full impact

of the recent shutdown may take some further time to emerge, we

continue to see tapering in first quarter next year," analysts

at Societe Generale wrote in a note, forecasting employment

would rise by a firm 240,000.

A snap poll of participants in the Reuters Global Markets

Forum chatroom showed 42 out of 46 respondents did not expect a

Fed tapering in December.

Financial bookmakers expected major European indexes

to open flat to up 0.4 percent on Monday.

Australia's S&P/ASX 200, also supported by data last

week showing an improvement in economic growth in China -- its

biggest export market -- scaled a five-year peak, taking the

index close to "overbought" territory, an indication that there

could be a near-term pullback.

China's CSI 300 index advanced 1.5 percent, while

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

added 0.2 percent to a five-month high.

In New York, the benchmark S&P 500 index rose 0.7

percent on Friday to close at a second-straight record high,

capping its biggest weekly gain in three months on

stronger-than-expected earnings from the likes of Google

and Morgan Stanley.

Of the 98 S&P 500 companies that have so far reported

quarterly earnings, two-thirds either beat or met market

expectations, according to Thomson Reuters StarMine.

In terms of valuations, the S&P 500's 12-month forward

price-to-earnings ratio stood at 13.9, in line with its 10-year

average of 14 and slightly above the Nikkei's 13.5 and

the pan-European STOXX Euro 600 index's 12.7, data from

Thomson Reuters Datastream showed.

Tokyo's Nikkei gained 0.7 percent after earlier hitting a

three-week high in relatively light trade. It is up 41 percent

this year, spurred by fiscal and monetary stimulus, and its

30-day implied volatility has risen sharply above that in the

United States and Europe, Datastream figures showed.

DEFENSIVE DOLLAR

The dollar index, which tracks the greenback against

a basket of major currencies, was at 79.686 on Monday, not far

from an eight-month low of 79.478 touched on Friday.

The dollar was steady at $1.36765 to the euro after

hitting an eight-month low at $1.3704 in the previous session,

and up slightly at 98.01 yen.

Barclays Capital analysts said a strong reading in the U.S.

jobs data could see markets pare back expectations of a delay in

the Fed's tapering, which would lead to a rally in the dollar.

"We forecast nonfarm payrolls to increase by 200,000 and the

unemployment rate to decline to 7.2 percent. Results in line

with our forecast would likely lead to a broad U.S. dollar

rally, as expectations for a taper delay are pared back," they

wrote in a note.

In the commodity markets, Brent crude was flat at

around $109.9 a barrel, building on Friday's 0.8 percent rise.

Gold gained 0.2 percent to around $1,318 an ounce,

having posted its best weekly rise in two months last week.

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