HONG KONG - Asian stock markets were held back Wednesday by a downturn in Japanese business confidence and persistent worries about Chinese measures to cool the economy.
Both Tokyo and Sydney ended the day flat, with the Nikkei index slipping 6.99 points to 10,309.78 and Sydney's S&P/ASX 200 edging up 0.9 points to 4,767.8.
Hong Kong's Hang Seng fell 1.95 per cent, or 455.84 points, to 22,975.35, while Shanghai's Composite Index plunged 0.54 per cent, or 15.66 points, to 2,911.41.
Wall Street provided some support after November retail sales rose more than expected and the Federal Reserve decided to maintain near-zero interest rates and a 600 billion dollar asset purchase programme.
The Dow Jones Industrial Average rose 0.42 per cent to its highest level in 27 months, the broader S&P 500 index edged up 0.09 per cent and the tech-rich Nasdaq climbed 0.11 per cent.
While this gave a lift to Tokyo, traders also noted poor quarterly earnings from US electrical appliance retailer Best Buy, a bad sign for Japanese electronic goods makers.
Japan's Tankan quarterly survey of business confidence heightened investors' caution, as the index weakened for the first time in nearly two years due to the yen's strength, which hurts exporters, and general global uncertainty.
"It's a tug-of-war between the improvement in overseas conditions and the deterioration in Tankan business sentiment concerning the outlook," Okasan Securities strategist Hideyuki Ishiguro told Dow Jones Newswires.
Elsewhere, Sydney trod water despite an announcement by the competition regulator that it would not obstruct an 8.3 billion US dollar (S$10.8 billion) merger between the Australian and Singapore stock exchanges to create the world's fifth-biggest bourse.
Shares in the Australian Securities Exchange were unchanged as investors contemplated the long road ahead before the merger gets approval from an array of authorities involved in the process.
"There are still all the political issues facing the deal, which could mean it still gets tied up for a while," an analyst at one local broker told Dow Jones.
"The Australian opposition are quite vocal and some of them seem to be using this as a platform to put on a show and basically raise their own profiles." In Shanghai, traders were spooked by an announcement that Beijing hopes to hold down inflation next year at four per cent, up a per centage point from this year's target but still well below the actual inflation level - the consumer price index rose 5.1 per cent year-on-year in November.
"Now that the government has raised the inflation target to four per cent next year, it means inflationary pressure will stay strong and so will policy tightening," said Jacky Zhang, analyst at Capital Securities.
Hong Kong was led lower by commodity stocks such as energy giant CNOOC and PetroChina due to a lower oil price.
In addition, Cathay Pacific plunged 7.17 per cent after the company announced a slowdown in passenger growth in November to 8.7 per cent year-on-year from 14.1 per cent in October and 18.4 per cent in September, and following a downbeat forecast for the sector by industry body IATA.
Oil was lower in Asian trade ahead of a widely monitored US energy report.
New York's main contract, light sweet crude for January delivery, dropped 74 cents to 87.54 dollars a barrel. Brent North Sea crude for January eased 16 cents to 91.05 dollars.
The dollar rose against the yen and euro in Asia following the Federal Reserve's decision to maintain its asset purchase programme.
The dollar rose to 83.81 yen in Tokyo trade from 83.66 yen in New York late Tuesday.
The euro fell to 1.3347 dollars from 1.3375 dollars while edging down to 111.87 yen from 111.90 yen.
Gold closed at 1,390.00-1,391.00 US dollars an ounce in Hong Kong, down from Tuesday's close of 1,405.00-1,406.00.
In other markets:
- Manila fell 1.40 per cent, or 58.28 points, to 4,089.75.
- Wellington rose 0.27 per cent, or 8.97 points, to 3,297.92. Telecom rose 1.9 per cent to 2.16 New Zealand dollars. Fletcher Building fell 1.3 per cent to 7.75 after launching a 740 million Australian dollar bid for Australia's Crane Group. Air New Zealand rose 1.4 per cent to 1.43.
- Taipei rose 0.19 per cent, or 16.28 points, to 8,756.71. Formosa Plastics climbed 1.91 per cent to 96.0 Taiwan dollars, while Taiwan Semiconductor Manufacturing rose 1.45 per cent to 70.0.
- Seoul rose 0.42 per cent, or 8.43 points, to 2,017.48, supported by shipyard stocks after two firms won billion-dollar orders.
- Jakarta fell 0.85 per cent, or 31.35 points, to 3,658.31.
- Singapore fell 0.94 per cent, or 29.71 points, to 3,147.20 points. Commodities trading firm Olam International fell four cents to 3.07 Singapore dollars and Neptune Orient Lines was steady at 2.19 dollars.
- Kuala Lumpur fell 0.1 per cent, or 1.48 points, to 1,509.10. Gaming group Genting shed 2.70 per cent to 10.76 ringgit, developer Sunway City was down 1.50 per cent at 4.49, while investment holding company RHB Capital rose 1.80 per cent to 8.57.
