Asian equities traded mostly lower on Thursday, with Japanese shares sharply lower, after preliminary data showed that Chinese manufacturing activity slowed to a 7-month low in February.
The HSBC China flash purchasing managers' index (PMI) for February fell to 48.3, from a final reading of 49.5 in January, further suggesting that the world's second-largest economy may be facing a slowdown.
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Overnight losses on Wall Street also added to the downbeat mood.
The Nasdaq Composite snapped an eight-day winning streak, falling over 0.8 percent. The S&P 500 fell over 0.6 percent, while the blue-chip Dow dropped 0.6 percent after minutes from the Federal Reserve's latest policy meeting suggested that tapering will continue unless there is a big economic surprise.
Nikkei drops 2.2%
Japan's benchmark Nikkei index extended Wednesday's losses to close at 14,449 following trade data.
The country logged a record monthly trade gap in January as Imports outpaced exports resulting in a deficit of 2.79 trillion yen ($27.30 billion), versus a 2.5 trillion yen shortfall anticipated by analysts.
Exporter stocks felt the pressure of a stronger yen, which traded at 101.80 against the U.S. dollar. Fast Retailing tumbled over 3 percent on news that it plans to list directly in Hong Kong. Automakers Honda Motor and Suzuki Motor slipped over 2 percent each.
E-commerce group Rakuten fell over 4 percent on news that it would buy a mobile voice messaging application for $900 million in cash.
Tokyo Electric Power was also in negative territory on Thursday. It posted a 2.3 percent loss after news revealed that 100 cubic meters of contaminated water leaked from the Fukushima tank area.
Shanghai 0.2% lower
Mainland shares fell into negative territory in the final hour of trading, after underwhelming PMI data led to volatile trade throughout the day.
After it confirmed news of a tie-up with PSA Peugeot Citroen on Wednesday, Dongfeng Auto gained 2.8 percent on Thursday. Sinopec Corp led the gains with a surge of 10 percent after it announced plans to restructure its retail and wholesale business.
However, declines in banking and property stocks capped gains. ICBC and Agricultural Bank of China lost 1 percent each. China Merchants Property fell 1.2 percent.
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Sydney adds 0.1%
After hovering near the unchanged level for most of the session, Australian shares managed a modest rebound into positive territory, stretching their winning streak into a fifth consecutive session.
Strong earnings reports boosted the benchmark S&P ASX 200 index in early trade to an intraday high of 5,441. Leighton Holdings climbed 7 percent after it reported a 30 percent jump in full-year underlying net profit. Australia's third largest retail fund manager AMP advanced over 10 percent after it announced that it expected to stop profit declines in its wealth protection unit in 2015.
However, gains were offset by declines in banking and mining stocks. Macquarie Group and Whitehaven Coal were the top losers in their respective sectors, dropping over 1.2 percent each.
Meanwhile, the Aussie fell to a one-week low of 0.8949 cents against the U.S. dollar.
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Kospi 0.6% lower
South Korean shares were dogged by a sluggish tone on Thursday, hitting a one-week low of 1,930.
Naver shares dived over 8 percent as Facebook's plan to buy WhatsApp sparked worries about rising competition. Blue-chip stocks like Hyundai Motor slipped over 1.5 percent each while KB Financial Group lost 2.5 percent.
The Korean won dropped 0.6 percent, to trade at 1,072 against the U.S. dollar, marking its worst daily fall in 3 weeks.
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