Oil languishes near its lowest since start of Ukraine

HONG KONG Oil languished near its lowest since the beginning of the war in Ukraine on Friday, despite fears of a global recession, but stocks gained ahead of the U.S. jobs data that will give another clue to the health of the world's largest economy.

Benchmark crude futures were up a touch at $94.23 a barrel and U.S. crude futures were a whisker higher at $88.70 a barrel, after both closed the previous session at their lowest levels since February.

Data showing a surge in U.S. inventories last week was a factor in the loss.

It's a combination of the inventory data and the worries about demand. The oil price has come down because the market is worried about growth more than inflation because of the fact that inflation is still a major issue, said Prashant Bhayani, chief investment officer for Asia at BNP Paribas Wealth Management.

The US Treasury yield curve, measuring the gap between yields on two and 10 year Treasury notes, reached 39.2 basis points overnight, the deepest inversion since 2000, is a warning for the global economy.

An inverted curve is often seen as a sign of a recession.

On Friday morning, the 10-year yield was 2.6865 per cent and the two-year yield 3.0509, leaving the gap between them at a still large 36.6 basis points.

The bond market is saying there is a pretty high chance of a recession, while the equity market is focused on labour data, said Bhayani.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.74 per cent, helped by gains from index heavyweight TSMC, which rose 1.8 per cent, regaining ground it had lost earlier in the week due to U.S. House of Representatives Speaker Nancy Pelosi's visit to Taiwan.

Non-farm payrolls increased by 250,000 jobs last month, after rising by 372,000 jobs in June, according to the U.S. employment data due later in the day.

We're waiting for a slowdown in the labour market, so we're going to see more rallies in U.S. treasuries if we get a big miss. If it's a beat, people are going to say, 'oh well it's going to miss'', said Bhayani.

The dollar index, which measures the dollar against six major peers, was at 105.86 in the currency markets, having fallen 0.6 per cent overnight, along with falling U.S. yields.

The Bank of England raised interest rates and warned of a long recession that was approaching Britain, and the pound was down a whisker at $1.2142 after taking a spin overnight.

Spot gold was steady at $1,790 an ounce.