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* Asian stock markets: https://tmsnrt.rs/2zpUAr4
Asia ex-Japan sell-off, Australia at five-week low, Nikkei slips
* Strong U.S. payrolls temper Fed rate cut expectations
* Turkish lira near 2-week lows on c.bank independence worries
By Swati Pandey
SYDNEY, July 8 (Reuters) - Asian shares were a sea of red on Monday after strong U.S. job gains tempered expectations the Federal Reserve will deliver a large rate cut, while the Turkish lira hovered near two-week lows on worries about central bank independence.
Share sentiment was also dampened by U.S. investment bank Morgan Stanley's decision to reduce its exposure to global equities due to misgivings about the ability of policy easings to offset weaker economic data.
The dour mood extended beyond Asia with the pan-region Euro Stoxx 50 futures opening 0.4% lower while Germany's DAX and London's FTSE slipped 0.5% and 0.3% respectively. E-minis for the S&P500 declined 0.25%.
In a rare occurrence, every market across Asia was in the red on Monday. MSCI's broadest index of Asia-Pacific shares outside Japan lost 1.4%. Japan's Nikkei faltered 1%.
Chinese shares were heavily sold off with the blue-chip index down 2.2% and Hong Kong's Hang Seng index down 1.8%.
South Korea's KOSPI was off 2.1% and Australian shares slipped about 1.2% to a five-week low.
"We are lowering our exposure to global equities to the range we consider 'underweight'," Morgan Stanley's London-based strategist Andrew Sheets said in a note. The previous range was 'neutral'.
Expensive valuations and pressure on earnings were among the reasons for the downgrade, Sheets said, while the bank increased its exposure to emerging markets sovereign credit and safe haven Japanese government bonds.
Since the start of the year, global equities have generally been bolstered by expectations that central banks will keep interest rates at or near record lows to boost economic growth.
Those expectations were tempered by a U.S. labour report on Friday that showed nonfarm payrolls jumped 224,000 in June, beating forecasts for 160,000, in a sign the world's largest economy still had fire.
Given the strength shown in that data, investors now expect U.S. Federal Reserve Chairman Jerome Powell to go slow on rate cuts this year.
Bets for aggressive Fed easings are already off, with the market now pricing a 27 basis points easing this month, from 33 basis points prior to payrolls.
Powell will provide further cues on the near-term outlook for monetary policy this week at his semi-annual testimony to the U.S. Congress.
"Global equities are undoubtedly expensive, but valuation has been driven by lower yields and liquidity, and this just makes this Thursday's speech from Fed chair Powell so important," said Chris Weston, a strategist at Pepperstone.
"For those running dollar positions, gold or U.S. equities...Powell's testimony is an event risk and one where we should consider how any reactions would affect our exposures."
CURRENCIES AND GEOPOLITICS
There was some positive news on the protracted China-U.S. trade war with White House Economic adviser Larry Kudlow confirming that top representatives from the United States and China will meet in the coming week for trade talks.
"Whether the negotiators can find a solution to the difficult structural issues that remain between the two sides is another matter, and Kudlow cautioned there was 'no timeline' to reach an agreement," National Australia Bank strategist Rodrigo Catril said.
In currency markets, action was in the Turkish lira which weakened to 5.7930 per dollar, the lowest since June 28 after Turkey's central bank governor Murat Cetinkaya, whose four-year term was due to run until 2020, was replaced by his deputy Murat Uysal.
President Tayyip Erdogan sacked Cetinkaya for refusing the government's repeated demands for rate cuts, laying bare differences between them over the timing of interest rate cuts to revive the recession-hit economy.
The dollar index, which measures the greenback against a basket of major currencies, was a shade weaker at 97.245 after climbing to a 2-1/2-week top of 97.443 on Friday.
The euro was a tad lower at $1.1224, not far from a 2-1/2-week low of $1.1205 touched on Friday.
The Australian dollar, which has been on an uptrend since June 18, slipped below 70 U.S. cents to last trade at $0.6985.
Geopolitics may be in focus this week following news on Sunday that Iran will boost its uranium enrichment, in breach of a cap set by a landmark 2015 nuclear deal.
"So far U.S.-Iran tensions have not had a material impact on markets, but if tensions escalate it could be a different story," said NAB's Catril.
In commodity markets, oil prices rose with Brent crude futures, the international benchmark for oil prices, up 5 cents at $64.28 per barrel while U.S. crude added 4 cents to $57.55.
Spot gold gained 0.3% to $1,403.21 an ounce.
(Editing by Darren Schuettler and Jacqueline Wong)