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* Weak U.S. payrolls data bolster Fed rate cut expectations
* U.S. money market futures price in 2 rate cuts this year
* Yuan falls to lows last seen in late 2018
* Asian stock markets: https://tmsnrt.rs/2zpUAr4
TOKYO, June 10 (Reuters) - U.S. stock futures and Asian shares rose on Monday after the United States dropped its threat to impose tariffs on Mexico in a deal to combat illegal migration from Central America, and as weak U.S. jobs data raised hopes for U.S. interest rate cuts.
The Mexican peso jumped about 2.0% in early Monday trade to 19.2285 on the dollar on news of the deal, while the Chinese yuan slipped to its lowest levels this year on weak Chinese imports data and as talks to end the Sino-U.S. dispute remained deadlocked.
S&P500 mini futures rose as much as 0.8% and was last up 0.4%. The 10-year U.S. Treasuries yield jumped back 3.5 basis points to 2.119 percent, after hitting a 21-month low of 2.053 percent on Friday on soft U.S. jobs data.
Global investors had feared that opening up another trade conflict, while still battling with China, could tip the United States and other economies into recession.
Tokyo's Nikkei gained 1.1% while MSCI's index of Asia-Pacific shares outside Japan rose 0.7%, led by strong gains in Hong Kong and Indonesia.
The improved risk sentiment also helped lift the dollar against the yen 0.15% to 108.38 yen.
"The deal with Mexico is boosting sentiment while expectations of U.S. rate cuts will be also supporting share prices," said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui DS Asset Management.
"Still, with limited progress seen so far in U.S-China trade talks, the most important issue for markets, stock prices will be able to rise only so much," he added.
That cautionary note was driven home by Chinese data on Monday morning showing imports contracted 8.5% in May from a year-earlier, a much worse than expected outcome that signalled weak domestic consumption.
Exports, however, unexpectedly rose 1.1% last month, though many suspect the uptick is linked to front-loading of shipments by firms to avoid higher U.S. tariffs.
The yuan extended its losses after the data, while expectations the Fed will cut rates kept the dollar on the defensive after a weak jobs report from the U.S. Labor Department.
Nonfarm payrolls increased by 75,000 jobs last month, much smaller than the 185,000 additions estimated by economists in a Reuters poll.
Wage growth, closely watched for its impact on inflation, cooled to 3.1 percent from a year earlier, the slowest annual increase since September. Just three months earlier, wages had been rising at their fastest rate in a decade.
Although Fed funds rate futures prices dropped on Monday after the Mexico deal, they are still pricing in more than two 25-basis point rate cuts by the end of this year, with one almost fully priced in by July.
"I would expect optimism to rule markets until the next Fed's meeting," said Naoya Oshikubo, senior economist at Sumitomo Mitsui Trust Asset Management.
The Federal Reserve's next policy meeting is set for next week, on June 18-19.
The euro was little changed at $1.1329 near a 2-1/2-month high of $1.1348 touched on Friday.
Gold slipped 0.8%, having hit a 14-month high of $1,348.1 per ounce on Friday, near a major resistance around $1,350.
The Chinese yuan was soft after China's central bank chief said late last week there was no one specific "numerical number" that was more important than another when asked if there is a red line for Beijing.
"Recent comments from current and former central bank governors suggest a consensus is building among Chinese policymakers that they do not attach much significance to defending the seven per dollar level," said Ei Kaku, currency strategist at Nomura Securities.
The yuan fell about 0.35% to as low as 6.9366 per dollar , its lowest since early December, in the onshore trade. The offshore yuan traded at 6.9385 yuan per dollar , having hit a seven-month low of 6.9616 on Friday.
"The yuan would weaken further should there be no summit meetings between the two countries at an upcoming G20 meeting in Osaka," Nomura's Kaku said.
Many investors are still clinging to hopes that Trump will meet Chinese President Xi Jinping on the sideline of Group of 20 leaders' meeting late this month to seek compromise on trade and other economic issues.
Ahead of the summit, G20 finance leaders on Sunday said that trade and geopolitical tensions have "intensified", raising risks to improving global growth, but they stopped short of calling for a resolution of the deepening U.S.-China trade conflict.
Oil prices extended gains after Saudi Arabia said on Friday OPEC and non-member Russia were close to agreeing to extend an output production cut beyond June and as Wall Street rallied.
Brent futures rose 0.25% to $63.45 per barrel while U.S. crude futures gained 0.57% to $54.30. (Reporting by Hideyuki Sano; Editing by Simon Cameron-Moore & Shri Navaratnam)