GLOBAL MARKETS-Aussie shares hit 5-yr high, dollar near 8-mth low


* Australian shares rise 0.8 pct to 5-year peak

* Asian shares tick higher to 5-month high

* Dollar stays on back foot on expectations Fed to delay


By Dominic Lau

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

five-year peak on Monday, taking cues from the U.S. S&P 500's

record high as investors bet the Federal Reserve will

extend its cheap money policies into next year.

The change in expectations followed a 16-day shutdown of the

U.S. government that could cloud the economic outlook and make

the Fed wary to scale back its $85 billion a month bond-buying

programme this year as many had expected. This kept the dollar

on the back foot.

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

departments reopen, with the September nonfarm payrolls report

due on Tuesday.

"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.

Australian shares scaled a five-year peak, while

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

inched up 0.2 percent to a five-month high.

U.S. S&P 500 E-mini futures added 0.1 percent in

early Asian trade on Monday, signalling a further rise for the

market if the gains are maintained through the day.

The benchmark S&P 500 U.S. index rose 0.7 percent on Friday

to close at a record high for the second straight day, 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

third-quarter 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.

The dollar index, which tracks the greenback against

a basket of major currencies, was at 79.637 on Monday, not far

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

The dollar was steady at $1.3682 to the euro after

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

and down a touch at 97.86 yen.

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

jobs data would likely pare back the expectations of the Fed

delaying 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.

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