By V. Phani Kumar, Leslie Shaffer & Kirsty Green HONG KONG (MarketWatch) -- Asian markets ended mixed Thursday, with Japanese stocks finishing higher as the yen's weakness spurred exporters such as Sony Corp., while Hong Kong shares declined as strong Chinese economic data added to fears of further policy tightening. Japan's Nikkei 225 Average bounced 1.2% to 10,868.41 to reverse direction after three days of declines. China's Shanghai Composite ended 0.2% higher after a sharp fall in the previous session. But Hong Kong's Hang Seng Index slumped 2% amid concerns the strength of China's economic recovery would force Beijing to tighten its monetary and fiscal policies to control rising inflationary pressures. China's fourth-quarter gross domestic product rose 10.7% from the year-earlier period, pushing 2009 GDP growth to a better-than-expected 8.7%. At the same time, China's inflation as measured by the consumer-price index rose 1.9% in December, driven by high food prices. See full story. Chinese banks in Shanghai retraced some losses they suffered the previous day, with Bank of Communications (CN:601328 8.83, +0.20, +2.32%) gaining 2.3% and China Merchants Bank (CN:600036 16.15, +0.29, +1.83%) (CIHHF 2.37, -0.24, -9.20%) rising 1.8%. But mainland banks, property developers and materials stocks lost heavily in Hong Kong. Bank of Communications (HK:3328 8.39, -0.33, -3.78%) fell 3.8% and China Merchants (HK:3968 18.36, -0.54, -2.86%) fell 2.9%, while Agile Property Holdings (HK:3383 10.64, -0.40, -3.62%) (AGPY.Y 71.07, -2.10, -2.87%) lost 3.6%, Aluminum Corp. of China (ACH 30.33, -1.16, -3.68%) (HK:2600 9.06, -0.37, -3.92%) slid 3.9% and Angang Steel (ANGG.Y 80.96, -1.28, -1.56%) (HK:347 15.08, -0.64, -4.07%) shed 4.1%. "We don't expect any strong rebound in China banks and China property stocks in the near-term, as further tightening concerns remain a major overhang in these sectors," said Conita Hung, head of equity markets at Delta Asia Financial Group. But some commentators said the China data was not all doom and gloom. "CPI jumped quite a bit in December, so that may have unnerved the markets, but the downside is limited as the growth is still intact," said Amy Lin at Capital Securities in China. Worries that any tightening measures from Beijing would weigh on China's demand for commodities as well as a stronger U.S. dollar also sent mining and metals shares lower elsewhere in the region. Australia's S&P/ASX 200 dropped 0.8%, with BHP Billiton (BHP 78.15, -2.88, -3.55%) (AU:BHP 42.67, -0.74, -1.70%) shedding 1.7% and Rio Tinto (RTP 229.12, -10.68, -4.45%) (AU:RIO 75.84, -2.49, -3.18%) losing 3.2%, while India's Sensex dropped 1.3% in afternoon trading, as Sterlite Industries (SLT 18.11, -1.00, -5.23%) skidded 2.8% and Hindalco Industries dropped 1.2%. Elsewhere, South Korea's Kospi rose 0.5%, Taiwan's Taiex fell 1.1%, New Zealand's NZX 50 slipped 0.1% and Philippine shares rose 0.1%. In afternoon trading, Singapore's Straits Times lost 1.2%, Thailand's SET Index shrank 1.1% and Indonesia's JSX index dipped 1.6%. In addition to worries about possible tightening by China, several regional stocks were also hurt by sharp overnight losses on Wall Street, where the Dow Jones Industrial Average (INDU 10,603, -122.28, -1.14%) slid 122 points for its biggest one-day drop so far this year. Shares of HSBC Holdings (HK:5 87.05, -0.80, -0.91%) (HBC 56.04, -1.58, -2.74%) dropped 0.9% in Hong Kong and Foxconn International Holdings (FXCN.Y 26.80, -0.15, -0.56%) (HK:2038 9.42, -0.88, -8.54%) slumped 8.5% in Hong Kong and Nanya Technology Corp. tumbled 6.9% in Taipei, while ICICI Bank (IBN 37.60, -0.54, -1.42%) shrank 2.8% and Wipro (WIT 22.80, -0.41, -1.77%) gave up 1% in Mumbai afternoon trading. But Japanese exporters advanced on the yen's weakness against the U.S. dollar, with Sony Corp. (SNE 33.25, -0.74, -2.18%) (JP:6758 3,060, -5.00, -0.16%) climbing 4.1% for its first positive finish in three sessions, while Honda Motor Co. (HMC 35.38, -1.20, -3.28%) (JP:7267 3,255, -45.00, -1.36%) advanced 1.7% to snap a three-session losing streak. Among financials, Sumitomo Mitsui Financial Group (SMFJ.Y 3.10, -0.18, -5.49%) (JP:8316 2,891, -40.00, -1.36%) jumped 4.5% after setting a price for its planned public offering later this month. Insurers also got a boost from a Nikkei report that non-life insurance companies are bolstering their Chinese operations on the back of rising auto ownership. Mitsui Sumitomo Insurance Group (JP:8725 2,440, +15.00, +0.62%) (MSIG.Y 13.20, -0.29, -2.15%) added 2.5%. South Korea's LG Display (LPL 17.74, -0.30, -1.66%) gained 4.6% after reporting better-than-expected earnings for the fourth quarter. Hyundai Motor (HYMT.F 16.25, -0.55, -3.27%) jumped 5.3%, supported by a recent rise in the greenback versus the South Korean won, and also its growing market share in China. Shares of Hynix Semiconductor (HXSCF 22.32, -0.39, -1.70%) advanced 2.2% after it swung back to a profit in the fourth-quarter from losses in the year-earlier period. Among foreign exchange majors, the euro fell against the dollar as speculators took China's economic data as a cue to sell the risk-sensitive unit. The euro was at $1.4093 from $1.4102 in late New York trade, after hitting a low of $1.4059 earlier in the session. The euro also bought 129.22 yen from 128.69 yen. The U.S. dollar was trading at 91.68 yen, compared with 91.23 yen. Lead Japanese government bond futures fell 0.17 to 138.98 points, with the 10-year cash JGB yield rising 0.5 basis points to 1.335%. Spot gold was trading at $1,114.70 per troy ounce, up $3.40 from the New York close. March Nymex crude-oil futures were 36 cents higher at $78.10 per barrel on Globex, after briefly trading in positive territory following the release of the China data.

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