Shares rise on optimism over potential end to US government shutdown

• Nasdaq futures up more than 1%; S&P 500 futures up 0.7%
• Potential end to U.S. government shutdown buoys market mood
• U.S. yields and dollar rise

By Rae Wee

SINGAPORE, Nov 10 (Reuters) - Global shares rose on Monday on optimism that an end to the historic U.S. government shutdown was in sight, while the dollar was nursing losses from last week.

The U.S. Senate on Sunday moved forward on a measure aimed at reopening the federal government and ending a now 40-day shutdown that has sidelined federal workers, delayed food aid and snarled air travel.

The breakthrough helped push Nasdaq futures NQc1 up 1.2% while S&P 500 futures ESc1 rose 0.7%. EUROSTOXX 50 futures STXEc1 and DAX futures FDXc1 were up more than 1% each, while FTSE futures FFIc1 gained 0.85%.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was up 1% and Japan's Nikkei .N225 advanced 0.97%.

"Markets may see short-term relief, but headline-driven volatility is likely to continue until there's a clear resolution," said Charu Chanana, chief investment strategist at Saxo.

If the Senate eventually passes the bill, the package must still be approved by the House of Representatives and sent to President Donald Trump for his signature, a process that could take several days.

The shutdown has taken a growing toll on the U.S. economy, with federal workers from airports to law enforcement and the military going unpaid while the central bank flies blind with limited government reporting of economic data.

White House economic adviser Kevin Hassett said in an interview that the nation's fourth-quarter GDP could be negative if the shutdown dragged on. Data on Friday showed that U.S. consumer sentiment slumped to near a 3-1/2-year low in early November as households worried about the economic fallout.

"While a deal would be market-friendly by restoring confidence and liquidity, it doesn't undo the growth dent from what's now the longest shutdown in U.S. history," said Chanana.

Still, overall risk sentiment remained upbeat on Monday.

In China, the CSI300 blue-chip index .CSI300 was down 0.24%, while Hong Kong's Hang Seng Index .HSI rose 0.6%.

Data on Sunday showed China's producer price deflation eased in October and consumer prices returned to positive territory, as the government steps up efforts to curb over-capacity and cut-throat competition among firms.

U.S. Treasury yields edged higher, with the benchmark 10-year yield US10YT=RR up 3.5 basis points to 4.1278%. The two-year yield US2YT=RR rose roughly 3 bps to 3.5886%. US/

In currencies, the dollar recovered some of its losses from last week, as investors assessed the outlook for the U.S. economy against a more hawkish Federal Reserve. FRX/

While recent data stoked worries about a weakening U.S. labour market, a slew of Fed officials last week reiterated their preference for going slow on further rate cuts.

Against the dollar, the euro EUR= was down 0.08% to $1.1556. Sterling GBP= fell 0.14% to $1.3147 while the dollar index =USD steadied at 99.66.

Markets are currently pricing in a 63% chance that the Fed will cut rates in December. 0USDIRPR

"On balance, Fed talk last week was in favour of holding off on easing in December, though most speakers were regional Fed presidents who don't vote," said economists at ANZ in a note.

"For now, we see the 12-member voting panel of seven governors and five regional Fed presidents voting for a 25 bp rate cut, with both hawkish and dovish dissents occurring. We don't see a rate cut as foregone conclusion yet and acknowledge the decision will depend on the incoming data and the balance of risks associated with the outlook."

Against the yen JPY=, the dollar was up 0.3% to 153.91.

Bank of Japan policymakers saw a growing case to raise interest rates in the near term, with some calling for the need to ensure companies' wage-hike momentum will be sustained, a summary of opinions at the October meeting showed on Monday.

In commodities, oil prices rose, with Brent crude futures LCOc1 up 0.72% to $64.09 per barrel, while U.S. crude CLc1 gained 0.8% to $60.23. O/R