* Asian stock markets : https://tmsnrt.rs/2zpUAr4
* Nikkei dips early, S&P 500 futures -0.3%
* Markets narrow odds on 75 bp hike ahead of U.S. CPI
* Dollar resumes rise with Treasury yields
* Oil extends losses on demand worries
By Wayne Cole
SYDNEY, Aug 8 (Reuters) - Asian share markets made a stuttering start on Monday and the dollar held firm after a stunning U.S. payrolls report pushed back against talk of recession but also bolstered the case for more super-sized rate hikes.
Markets quickly moved to price around a 70% chance the Federal Reserve will lift rates by 75 basis points in September, sending two-year yields up 20 basis points on Friday and further inverting the curve.
The blockbuster data only raised the stakes for the June U.S. consumer prices report due on Wednesday, which could see a slight pullback in headline growth, but likely a further acceleration in core inflation.
"Despite sluggish growth and an expected slide to a 0.2%m/m July CPI gain, the Fed will likely raise policy rates 75 bps at its September meeting," said Bruce Kasman, head of economic research at JPMorgan.
"The key question is whether it will decide that a material rise in the unemployment rate is necessary to achieve its objectives," he warned. "If this is the case, its guidance on rates will move significantly higher, alongside a message that it will likely prove to be less sensitive to near-term growth disappointments."
The risk haunted equity markets with S&P 500 futures and Nasdaq futures both down 0.3% in early trade.
MSCI's broadest index of Asia-Pacific shares outside Japan dipped 0.2%, after three sessions of gains. Japan's Nikkei eased 0.3% and South Korea 0.4%.
There was little obvious market reaction to news that the U.S. Senate on Sunday passed a sweeping $430 billion bill intended to fight climate change after some compromises on taxation within the deal.
"The changes look unlikely to substantially change the net fiscal impact of the legislation, which continues to look likely to be less than 0.1% of GDP for the next several years, as new spending and new taxes roughly offset," said analysts at Goldman Sachs.
THE EXCEPTIONAL DOLLAR
Two-year Treasury yields were up at 3.24%, fully 40 basis points above 10-year yields.
Bonds also got a safe-haven bid due to unease over Beijing's sabre rattling against Taiwan as China conducts four days of military exercises around the island.
Chinese data out over the weekend showed exports picked up unexpectedly in July with a gain of 18%, while imports lagged with a rise of just 2.3%.
The jobs boom combined with the jump in yields to bolster the U.S. dollar, which was up at 106.640 against a basket of currencies having gained 0.8% on Friday.
"This key data point is a million miles from a current recession, both on a change of employment, and a levels of unemployment basis," said Alan Ruskin, global head of G10 FX strategy at Deutsche Bank.
"Data like this will further any thoughts about 'U.S. exceptionalism' and is very positive for the USD against all currencies."
The dollar held at 135.26 yen after jumping 1.6% on Friday, while the euro was struggling at $1.0164 and not far from chart support around $1.0095.
The single currency was not helped by news Moody's had cut Italy's outlook to negative as Prime Minister Mario Draghi's resignation shook the country's political landscape.
The rise in the dollar was a setback for gold, though it had managed to bounce from the lows hit on Friday to stand at $1,773 .
Oil prices continued their recent retreat after suffering the worst week since April on worries about stalling global demand as central banks keep tightening.
Brent lost 97 cents to $93.95, while U.S. crude eased 89 cents to $88.12 per barrel.
(Reporting by Wayne Cole; Editing by Sam Holmes)