* Nikkei rises, Korean shares at highest in more than 2 years
* Australian shares extend gains; Aussie dlr gains after CPI data
* Fed tapering expectations pushed to next year after payrolls disappoint
* U.S. 10-year Treasury yield at lowest levels since July
TOKYO, Oct 23 (Reuters) - Asian shares gained and the dollar wallowed near a two-year low against the euro on Wednesday after disappointing U.S. jobs data firmly pushed expectations for the tapering of Federal Reserve stimulus into next year.
Australian shares were up 0.3 percent at five-year highs. The Australian dollar jumped about a quarter of a U.S. cent after data showed the consumer price index rose more than expected, reducing expectations for another interest rate cut by the central bank.
MSCI's broadest index of Asia-Pacific shares outside Japan added about 0.3 percent, and Seoul shares hit their highest level in 26 months.
"Slow growth in the U.S. economy is worrisome for global markets in the long term," said IM Investment & Securities analyst Kang Hyun-gee. "But in the near term, extended liquidity will work in favour of equities."
U.S. S&P 500 E-mini futures were down about 0.1 percent, after the S&P 500 Index closed at a record high in New York on Tuesday.
U.S. nonfarm payrolls increased by 148,000 workers in September, less than expected. While the employment gain in August was revised up, the July figure was revised down to be the weakest since June 2012.
The report suggested the economy was losing momentum even before the U.S. fiscal standoff that partially shut down the government for more than two weeks, lending credence to the central bank's decision to hold off on reducing its stimulus.
"In light of the moderate tone of the September employment report, we have pushed out our expectation for the first Fed tapering in the pace of asset purchases to March 2014 from December 2013," strategists at Barclays wrote in a note to clients.
Nine of 15 U.S. primary dealers surveyed by Reuters on Tuesday expect the Fed to begin tapering its $85 billion-a-month bond-buying programme in March.
DOLLAR UNDER PRESSURE
The dollar was slightly lower against its Japanese counterpart at 98.10 yen, and remained under pressure elsewhere. The euro was at $1.3779, just below Tuesday's peak of $1.3792, its strongest since Nov. 2011.
The dollar index last stood at 79.249, after it fell to its weakest in eight months at 79.182 on Tuesday, and was within sight of its 2013 low of 78.918 touched in February.
The yield on benchmark 10-year Treasury notes edged down to 2.507 percent, its lowest since late July, after closing U.S. trade at 2.512 percent.
On the commodities front, concerns about a near-term U.S. crude surplus helped push the U.S. crude price down about 0.1 percent to $98.24.
Gold was nearly unchanged at $1,339.55 an ounce, having risen to a four-week high after the payrolls data.