Asian markets mixed after weak US data

Asian markets mixed after weak US data

HONG KONG - Asian markets were mixed Tuesday following weak US manufacturing data and fears over US talks aimed at averting the fiscal cliff, while Hong Kong and Shanghai rebounded from the previous day's losses.

The euro touched a six-week high against the dollar at one point, helped by news Greece had begun a debt-buyback programme and eurozone finance ministers had nodded through a bailout for Spain's troubled banks.

Tokyo fell 0.27 per cent, or 25.72 points, to 9,432.46, Sydney eased 0.62 per cent, or 27.9 points, to 4503.6 and Seoul lost 0.25 per cent, or 4.84 points, to close at 1,935.18.

Hong Kong was 0.15 per cent higher, adding 32.12 points to end at 21,799.97 while Shanghai was up 0.78 per cent, or 15.37 points, at 1,975.14.

Both markets rebounded after posting heavy losses the previous day.

US shares turned down on Monday after the Institute for Supply Management (ISM) said its index on manufacturing activity for November showed contraction following two months of expansion.

The purchasing managers index (PMI) fell to 49.5, below the 50 breakeven level, from 51.7 in October.

Businesses surveyed by the ISM blamed the slow global economy and uncertainty over the fiscal cliff battle in Washington. It followed positive manufacturing numbers across Asia, while Europe also saw a marginal improvement.

The Dow slid 0.46 per cent, the S&P 500 fell 0.47 per cent and the Nasdaq shed 0.27 per cent.

US politicians have until the end of the month to agree a deal on cutting the country's huge deficit and avoid the fiscal cliff of huge tax hikes and spending cuts widely expected to tip the economy into recession if they take effect.

However, there has been little progress, with Republicans and Democrats blaming each other for the stalemate.

On Monday the Republicans put forward a proposal to the White House that calls for US$800 billion (S$974.64 billion) in increased tax revenue, half of what President Barack Obama has proposed, while it also includes huge cuts to Medicare and other programmes. The plan was immediately rejected.

In Europe, Greece began its programme to buy back privately held debt at a big discount, the underlying condition for it to receive its next tranche of bailout funds from the European Union and International Monetary Fund.

Eurozone finance ministers also gave the green light to a 39.5 billion euros (S$62.90 billion) recapitalisation of Spain's banks next week.

A preliminary plan for a bailout for Cyprus worth 17 billion euros was also drawn up.

The euro climbed at one point to US$1.3081 - its highest since October 22 - before easing slightly to US$1.3074, while it also bought 107.21 yen in early European trade, compared with US$1.3051 and 107.36 yen in New York late Monday.

The dollar was slightly lower at 82.02 yen (S$1.2182) from 82.24 yen.

The Australian dollar rose to US$1.0454 from the US$1.0421 seen just before the central bank cut interest rates by 25 basis points to 3.0 per cent citing problems in the global economy, in particular Europe and the United States.

Oil prices eased, with New York's main contract, light sweet crude for delivery in January, down 43 cents to US$88.66 a barrel in the afternoon and Brent North Sea crude for January shedding 53 cents to US$110.39.

Gold was at US$1,705.44 at 1055 GMT compared with US$1,717.75 late Monday.

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