HONG KONG - Asian markets were mixed Thursday, despite a positive lead from Wall Street and news that Chinese manufacturing activity hit a two-year high in January.
The yen retreated after a two-day rally as Japan logged a record trade deficit for last year with exports hit by the ongoing territorial spat with China and Europe's long-running debt crisis.
Tokyo reversed early losses thanks to the yen's dip, with the Nikkei up 1.28 per cent, or 133.88 points, at 10,620.87, while Sydney rose 0.47 per cent, or 22.4 points, to 4,810.2, but Seoul shed 0.80 per cent, or 15.93 points, to 1,964.48.
Shanghai fell 0.79 per cent, or 18.31 points, to 2,302.60, with profit-takers moving in after the index hit an eight-month high in intra-day trade, while Hong Kong shed 0.15 per cent, or 36.20 points, to 23,598.90.
In China HSBC said its preliminary purchasing managers index (PMI) rose to 51.9 in January from 51.5 in December, its highest since January 2011.
Anything above 50 indicates growth while anything below is contraction.
The news reinforces views that the world's number two economy has picked up after a drawn-out slumber. On Friday official figures showed gross domestic product grew at a faster pace than expected in 2012 and at a quicker pace than the government had hoped.
The results provided a fillip to Japan's Nikkei, while data showing Japan suffered a second consecutive annual trade deficit last year sent the yen tumbling, providing shares with another lift.
Official figures from the finance ministry showed Japan's trade shortfall last year totalled 6.92 trillion yen (S$95 billion), with the deficit in December alone standing at a higher-than-expected 641.5 billion yen.
The yen had enjoyed a two-day rally from Tuesday - and equities slumped - after the Bank of Japan disappointed dealers with its two per cent inflation target and indefinite monetary easing, which they said was not enough.
In afternoon currency deals the greenback bought 89.32 yen, compared with 88.56 yen in New York late Wednesday. The dollar, however, is still down from the two-and-a-half-year high 90.24 yen before the BoJ move.
The euro bought 118.70 yen from 118.00 yen, and US$1.3298 from US$1.3315.
The three main indexes on Wall Street ended higher after a string of upbeat earnings from firms including IBM and Google.