* Sterling pauses as two UK ministers resign over Brexit
* Nikkei leads Asia shares higher, China bourse bounces 2 pct
* Balanced U.S. jobs data suggest Fed can stay gradual on hikes
* Oil, gold prices rise as dollar softens
By Wayne Cole
SYDNEY, July 9 (Reuters) - Asian shares rallied on Monday as favourable U.S. jobs data whetted risk appetites, while sterling wobbled after the shock resignation of two UK ministers over Brexit threatened the survival of Prime Minister Theresa May.
The pound peeled off around a third of a U.S. cent to $1.3290 as news broke British Brexit Secretary David Davis and Brexit Minister Steven Baker had resigned.
The move came just two days after a meeting at May's Chequers country residence supposedly sealed a cabinet deal on Brexit and underlines the deep divisions in her ruling Conservative Party over the departure from the EU.
"The outlook for the pound had brightened in recent weeks," said Westpac senior currency analyst Sean Callow, seeing a chance this could turn out positive for the currency.
"If the U.K. government presses ahead with this plan despite the unexpected resignation of “hard Brexit” officials and with the US dollar losing momentum, sterling should be able make a run at $1.35 multi-day."
Sentiment in other markets was mostly positive after Friday's U.S. payrolls report showed tame wages and more people looking for work.
"The combination of rising employment and increased labour force participation suggests healthy but not tightening labour market conditions in June, something that will allow the Fed to continue to hike rates at a gradual pace," said Kevin Cummins, a senior U.S. economist at RBS.
The balanced report helped Wall Street into the black and Japan's Nikkei followed with gains of 1.2 percent. E-Mini futures for the S&P 500 firmed 0.3 percent and European bourses were set to open higher.
MSCI's broadest index of Asia-Pacific shares outside Japan climbed 1.3 percent, on top of 0.7 percent rally on Friday when the launch of U.S. tariffs on Chinese imports came and went without too many fireworks.
"While trade tensions fan concerns about the future, incoming data show a soaring U.S. economy, a healthy labour market, and some rebound in Europe and Japan," said Barclays economist Michael Gapen.
"For now, overall policies and financial conditions still support growth and investment," he added. "A sharper-than-expected China slowdown from a domestic credit crunch and external trade tensions could be the main risk to global growth."
Chinese shares managed to rally on Monday with the Shangahi blue chip index up 2.2 percent after hitting its lowest in almost 18 months last week.
China's securities regulator said on Sunday it plans to ease restrictions on foreign investment in stock listed on the Shanghai or Shenzhen exchanges to attract more foreign capital and support the economy.
The focus this week would be on Chinese data for June covering inflation, new loans and international trade. The United States also releases inflation figures, while the Bank of Canada might well hike rates on Wednesday.
In currency markets, the U.S. dollar was mostly softer following the jobs report, with sterling being an outlier.
Against a basket of currencies the dollar had pulled back to 93.853, from a top of 94.486 on Friday. The euro held its gains at $1.1767, while the dollar was flat on the yen at 110.44.
In commodity markets, oil prices pushed higher as the dollar eased. U.S. crude futures gained 35 cents to $74.15 a barrel, while Brent rose 52 cents to $77.63 a barrel.
Gold was 0.5 percent firmer at $1,260.20 an ounce.
Editing by Sam Holmes & Shri Navaratnam