* Asian stock markets : tmsnrt.rs/2zpUAr4
* Asia's MSCI index ex-Japan headed for 5th straight weekly gain
* Investors focussed on U.S. non-farm payrolls
* Global bond yields near record lows on easy policy expectations
By Swati Pandey
SYDNEY, July 5 (Reuters) - Asian shares hovered near two-month highs on Friday as investors braced for U.S. employment data, a key release that could stoke or temper market expectations about aggressive policy easing by the Federal Reserve.
Trade across global markets was expected to remain subdued following the Independence Day holiday in the United States on Thursday and ahead of the non-farm payrolls report.
MSCI's broadest index of Asia-Pacific shares outside Japan was set for its fifth straight weekly rise which took it to 534.40, the highest since early May. It was last at 532.82.
Japan's Nikkei was a tad weaker. Chinese shares were mixed with the blue-chip index up 0.2%. Australia and New Zealand shares were slightly higher as was Hong Kong's Hang Seng index.
E-Minis for the S&P500 advanced about 0.1%.
World stocks and bonds have rallied since June on hopes global central banks will keep policy easy to support growth.
All eyes were now on U.S. non-farm payrolls, due later in the day, which is expected to have jumped by 160,000 in June compared with 75,000 in May.
"If payrolls were not to rebound this would be very significant," said Tapas Strickland, London-based markets strategist at National Australia Bank.
"A weaker than expected read would increase expectations of an emergency 50 basis points rate cut in July given that two soft payrolls are very rare with the last being back in 2012," he said.
"A better-than-expected print would likely see markets pare expectations of a July rate cut, though given the deterioration in other domestic data as well as international PMIs, a July rate cut of 25 basis points remains highly likely."
Fed futures are fully pricing in a 25-basis-point cut when the Fed meets on July 30/31. Investors also see a 25% chance of a 50-basis-point reduction.
The Fed is not alone in embarking on easier monetary policy. Australia's central bank has cut its cash rate by 50 basis points since June while leaving the door ajar for a third move this year. In the euro zone, financial markets expect the bloc's central bank to lay out the landscape for further monetary easing at its July 25 meeting.
Prospects of global easings have sent government bond yields to multi-year lows around the world.
Germany's 10-year government bond yield, a benchmark for euro zone debt, fell to minus 0.4% and matched the European Central Bank's deposit rate for the first time - a sign that markets are expecting rate cuts.
Yields on U.S. 10-year Treasuries hit their lowest since November 2016 at 1.946%.
The currency market was mostly sidelined ahead of the U.S. jobs figures.
The dollar index was steady at 96.762. It is up 0.7% so far this week.
"This resilience in the US dollar is, in part, due to its role as a safe-haven and the persistence of global trade and geopolitical tensions – even after the US-China agreed to a truce," Westpac wrote to clients in a note.
"At least of equal significance, however, is the fact that the FOMC is now not the only central bank ready to ease policy. Most notable is that the ECB intend to follow suit."
The dollar index, which measures the greenback against a basket of major currencies, fell 1.7% last month as investors priced in a 50-basis-point cut from the Fed.
Those expectations faded in recent days on more reserved Fed commentary and a truce in a protracted Sino-U.S. trade war, but it has since come back on underwhelming U.S. economic data.
A weaker greenback and soaring prices of iron ore - Australia's top export earner - have boosted the Aussie dollar despite a rate cut on Tuesday. The currency is so far up 1.4% this week and last held at $0.7025.
Against the Japanese yen, the dollar inched up to 107.84.
The euro traded at $1.1280, a touch higher from its two-week low of $1.1268 seen on Wednesday.
In commodity markets, oil prices were mixed with Brent crude futures, the international benchmark for oil prices, flat at $63.30 per barrel while U.S. crude eased 61 cents to $56.73.
Spot gold was higher at $1,417.06 an ounce.
Editing by Sam Holmes