China shares top 5,000 point level, bonds try to steady

SYDNEY (Reuters) - Asian shares fell on Friday and bonds tried to stabilize after a vicious losing streak, while the euro consolidated the week's hefty gains as investors braced for U.S. jobs data and another day of drama over Greece.

The main exception was China, where stocks advanced after a week of roller-coaster action. Shanghai <.SSEC> added 0.7 percent and cleared the 5,000-point barrier for the first time since early 2008, while the CSI300 <.CSI300> gained 0.3 percent.

Elsewhere, the mood was very subdued with MSCI's broadest index of Asia-Pacific shares outside Japan <.MIAPJ0000PUS> down a slim 0.3 percent. Japan's Nikkei 225 <.N225> and shares in South Korea <.KS11> lost 0.1 percent.

In the latest Greek twist, Prime Minister Alexis Tsipras will put creditors' proposals to parliament from 1500 GMT on Friday, but he has already dubbed the plan "extreme".

Before that likely contentious meeting gets underway, markets are bracing for the latest reading on U.S. jobs. Median forecasts in a Reuters poll are for payrolls to rise 225,000 with the jobless rate steady at 5.4 percent.

Yet markets only imply a one-in-three chance of a lift off in Fed funds by September, and are not fully priced for a move until December. <0#FF:>

"That September is seen as the first possible tightening by the Fed and there are two meetings before then, detracts significantly from the sensitivity to the data," says Alan Ruskin, head of forex at Deutsche.

"It would probably need a payroll number either side of 150,000 or 250,000 to get the market really excited whereby Fed expectations/probabilities start to change materially."

Caution ahead of the report kept Wall Street on the defensive. The Dow <.DJI> ended Thursday down 0.94 percent, while the S&P 500 <.SPX> lost 0.86 percent and the Nasdaq <.IXIC> 0.79 percent.

Declining oil and gold prices also weighed on energy and materials shares, which led declines in the S&P 500.

Global bonds steadied somewhat after a torrid week. Yields on 10-year Treasury paper were hovering around 2.32 percent having been as high as 2.425 percent on Thursday.

All eyes were on German 10-year Bunds after they rallied to 0.83 percent on Thursday and away from a giddy peak of 0.996 percent.

Treasuries had got a boost when the IMF downgraded its outlook for the U.S. economy and took the unusual step of cautioning the Fed to wait until the first half of 2016 to start raising interest rates.

Currencies have been equally whipsawed. The euro was resting at $1.1217 in Asian trading , having been as high as $1.1380 on Thursday. It was still up two cents on the week.

The single currency also steadied at 139.56 yen , not far from a five-month peak of 141.06.

The dollar held at 124.46 yen having bounced between 123.76 and 124.68 in the past couple of sessions. The dollar index, which measures it against a basket of six major currencies, was up 0.2 percent at 95.616 <.DXY>.

In commodity markets, oil was on the defensive ahead of an OPEC meeting that is expected to affirm an output target of 30 million barrels per day, ignoring calls from some producers to cut supply and support prices.

Brent crude edged up 3 cents to $62.06 a barrel, while U.S. crude futures eased 2 cents to $57.98.

(Editing by Shri Navaratnam & Kim Coghill)

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