* MSCI Asia ex-Japan down 0.2 pct
* Regional PMI, including China, show tepid improvement
* Nikkei faces profit taking as Japan's new fiscal year
* Trading quiet as some Asian markets, Europe, shut for
By Chikako Mogi
TOKYO, April 1 Asian shares and the euro fell on
Monday in choppy trade with exchanges closed in several Asian
markets, including Australia and Hong Kong, as well as in Europe
for Easter holidays.
Investors will look for market direction from Markit's U.S.
final manufacturing PMI for March and the Institute for Supply
Management's March manufacturing index due later in the session.
Analysts have said a growth trend in the U.S. is crucial to
maintain global risk-positive sentiment. It is the
outperformance in U.S. equities on solid U.S. economic reports
that has helped drive global shares and other risk asset prices
generally higher in the first quarter.
From Asia, surveys showed that stronger domestic demand
helped China's factory activity to rebound in March, with new
orders up sharply in a sign that the underlying economic
recovery is strong enough to weather risks from patchy export
The official manufacturing purchasing managers index (PMI)
for March showed China's factory output ran at its fastest in 11
months at a reading of 50.9, below 52.0 forecasts by economists
but still signalling economic recovery may be accelerating.
A private HSBC final PMI survey also rose to 51.6, roughly
in line with a flash reading of 51.7 and up from February's
Oil markets focused on the official PMI missing market
projections as raising concerns about easing demand, sending
U.S. crude futures down 0.5 percent to $96.78 a barrel
and Brent down 0.3 percent to $109.66.
"The data came in below market expectations, which could
indicate that oil demand growth may not expand quite as quickly
as we would like it to," said Carl Larry, president of Oil
Outlooks and Opinion, based in Houston.
"But China's still growing and that continues to be an
underlying support factor long-term for the market. Whether they
are at 6 percent or 7 percent they are growing."
The MSCI's broadest index of Asia-Pacific shares outside
Japan was down 0.2 percent, with South Korean
shares falling 0.5 percent and Shanghai easing 0.1
percent. The pan-Asian index ended the first quarter with the
smallest gain in three quarters with a 1.4 percent rise, after
reaching a 1-1/2-year high in February.
The Australian dollar eased 0.1 percent to $1.0392,
showing limited reaction in the absence of Australian investors.
China is Australia's largest trading partner and Australian
markets tend to move on Chinese economic indicators.
"While the rebound of sub-indices appears broad-based, it is
still much lower than the average gain seen in past years," ANZ
said in a research note on the Chinese PMI data.
Elsewhere, South Korean exports last month barely grew from
a year earlier while inflation unexpectedly eased to a 7-month
low on weak domestic demand, data showed on Monday, reinforcing
expectations for a central bank rate cut as early as next week.
The HSBC Taiwan Purchasing Managers' Index for March rose,
while manufacturing activity in Indonesia and new export orders
increased last month, an HSBC Markit survey showed. Indonesia's
trade deficit widened by more than double the forecast in
February as exports slumped.
In Japan, investors kicked off the country's new fiscal year
by taking profits in Japanese stocks, sending the Nikkei stock
average down 1.4 percent to a two-week low after it had
posted its best quarterly performance in nearly four years.
Expectations for strong monetary stimulus measures to be
announced by the Bank of Japan at its meeting on April 3-4 under
the new leadership have supported Japanese equities and
underpinned the dollar against the yen.
The BOJ's closely-watched tankan quarterly survey showed
that business sentiment improved in the first three months of
2013. Rising expectations for Prime Minister Shinzo Abe's
aggressive reflationary policies to beat deep-rooted deflation
and steer Japan back to growth drove the result.
The dollar was likely to be choppy leading up to the BOJ
meeting, with speculators looking to book profits from the rally
of the past several months, regardless of the gathering's
"The cap on dollar/yen for now is removed, with repatriation
flows related to Japan's fiscal year-end completed at the end of
March, so speculators will be looking to build long dollar/yen
positions leading up to the BOJ meeting," said Yuji Saito,
director of foreign exchange at Credit Agricole in Tokyo, adding
that the euro remained top-heavy.
The dollar fell 0.3 percent to 93.90 yen. The euro
dropped 0.2 percent to $1.2789, hovering near a
four-month low of $1.2750 touched last week.
The euro was pressured with Italy struggling to break a
political stalemate lasting more than a month after elections
and fallout from the Cyprus bailout.
Sentiment was also weighed by the Xinhua news agency saying
on Saturday that Beijing and Shanghai will implement strict
property cooling measures as part of a central government
crackdown on the overheated property market.
Spot gold firmed 0.1 percent to $1,600 an ounce,
partly supported by tension in the Korean peninsula.
"Normally a strong PMI from China would tend to draw
investors towards stocks and not support gold prices, but this
time we see a reverse. The North Korea tension is adding to the
market uncertainty," said Brian Lan, managing director of
GoldSilver Central Pte Ltd.