SYDNEY/HONG KONG (Reuters) – Asian shares advanced to three-month highs on Monday as progress on re-opening economies helped offset jitters over riots in U.S. cities and unease over Washington’s power struggle with Beijing.

There was also relief that while President Donald Trump began the process of ending special U.S. treatment for Hong Kong to punish China, he left their trade deal intact.

“With specific and verifiable measures against China appearing to be weak, markets may draw hollow consolation that the U.S. is treading carefully,” said analysts at Mizuho in a note.

After a cautious start Asian markets were led higher by China on signs parts of the domestic economy were picking up. Hong Kong .HSI managed to rally 3.3%, while Chinese blue chips .CSI300 put on 2.54%.

An official business survey from China showed its factory activity grew at a slower pace in May but momentum in the services and construction sectors quickened.

“Geopolitical risk can be sufficient to trigger an equity pullback. However, we remain comfortable with our preference for Chinese equities given they tend to be far more sensitive to domestic demand and policy stimulus than global drivers,” said strategists at Standard Chartered Private Banking in a note.

The hopeful signs in China helped lift MSCI’s broadest index of Asia-Pacific shares outside Japan 2.45% to its highest since early March. Tokyo’s Nikkei .N225 added 0.84% to also reach a three-month peak.

E-Mini futures for the S&P 500 recovered to be flat, having been up 0.12% in afternoon trade. EUROSTOXX 50 futures firmed 1.48% and FTSE futures 1.3%.

The resilience was notable given major U.S. cities were cleaning up streets strewn with broken glass and burned out cars as curfews failed to stop confrontations between activists and law enforcement.

The turmoil was a fresh setback for the economy which was only just emerging from a downturn akin to the Great Depression. Following poor data on spending and trade out on Friday, the Atlanta Federal Reserve estimated economic output could drop a staggering 51% annualised in the second quarter.

The May jobs report due out on Friday is forecast to show the unemployment rate surged to 19.8%, smashing April’s record 14.7%. Payrolls are expected to drop by 7.4 million, on top of the 20.5 million jobs lost the previous month.

YEARS, NOT MONTHS

“Current unemployment numbers go far beyond what has been experienced in any post-war recession,” wrote Barclays economist Christian Keller in a note.

“To the extent that some sectors may never return to pre-pandemic business-as-usual, labour faces a substantial challenge to reallocate workers,” he added. “Such a process could be a matter of years rather than months or quarters and in the meantime it would weigh on consumer demand.”

Bond investors suspect economies will need massive amounts of central bank support long after they reopen and that is keeping yields super low even as governments borrow much more.

Yields on U.S. 10-year notes were trading steady at 0.66% having recovered from a blip up to 0.74% last month when the market absorbed a tidal wave of new issuance.

The decline in U.S. yields has been a burden for the dollar, but the world’s reserve currency also tends to benefit from safe-haven status to limit the losses.

In afternoon trade, the dollar was 0.3% softer on a basket of peers at 97.923 having touched an 11-week low of 97.944 on Friday. It was also down on the yen at 107.50.

Much of the dollar’s recent decline has come against the euro which has been broadly boosted by plans for an EU stimulus package. The single currency was last up at $1.1143, after climbing 1.8% last week.

Markets are awaiting a meeting of the European Central Bank on Thursday where it is widely expected to raise its asset buying by around 500 billion euros to 1.25 trillion.

In commodity markets, gold added 0.91% to $1,742 an ounce.

Oil prices initially eased on worries about U.S. demand, but found support from reports Russia had no objection to the next meeting of OPEC and its allies being brought forward to June 4 from the following week.

Brent crude futures were off 37 cents at $37.70 a barrel, while U.S. crude fell 31 cents to $35.38.