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Asia shares up, but Thailand drops after martial law declared

Asian equity markets were mostly higher on Tuesday, but the mood was cautious amid developments in Thailand and as the Bank of Japan's two-day policy meeting commenced.

The Associated Press reported early on Tuesday that Thailand's army declared martial law in Bangkok to keep order, but military officials warned that the move did not constitute a coup.

Meanwhile, the Japanese central bank is widely expected to keep policy unchanged when it announces a decision on Wednesday. Traders will be focusing on governor Haruhiko Kuroda's post-meeting conference for clues on the direction of monetary policy.

Read MoreMore BOJ stimulus soon? Don't bet on it

Symbol
Name
Price
 
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%Change
NIKKEI
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HSI
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ASX 200
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SHANGHAI
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KOSPI
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CNBC 100
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Emerging markets lower

Thai shares finished 1.1 percent lower, hitting a one-week low while the baht fell 0.2 percent against the dollar.

"We are quite concerned about Thailand for two reasons: One is that even if this move is aimed at restoring peace and order, it doesn't restore the political equilibrium. There could also be questions about whether there are some background noises within the military about gaining power," said Vishnu Varathan, senior economist at Mizuho Bank.

Read MoreIs martial law the last straw for Thai investors?

Indonesia's Jakarta Composite lost over 2.3 percent on uncertainty over July's elections while Indian shares were flat after rallying 1 percent on Monday.

Read MoreHas the India stock market struck gold?

Nikkei gains 0.5%

Japanese shares snapped their four-day losing streak on a slightly weaker currency, helping the benchmark Nikkei move off the previous day's one-month low. The yen traded around 101.4 per dollar, moving off the previous day's three-and-a-half month high of 101.1.

Yahoo Japan surged 11 percent after saying on Monday that it has decided against buying Softbank's mobile telecoms provider, eAccess, for $4.4 billion due to the extent of challenges involved in operating its own network.

Retailers increased after a Reuters poll showed more companies expect sales to rebound by the end of the year following April's sales tax increase. Seven & I, Aeon and Fast Retailing rose over 1 percent each.

China shares higher

Mainland shares eked out a modest 0.1 percent gain, rebounding from the previous day's two-month low. Fears of a glut of new initial public offerings (IPOs) were eased after the country's securities regulators confirmed that there would be a 100 new market listings from June to the end of this year, which was smaller than expected.

Read MoreUS-China spy spat: What it really means

Automaker Great Wall Motor rose 0.8 percent after announcing a deal on Monday to set up a production base in Russia.

Meanwhile, Hong Kong shares jumped 0.6 percent, ending two days of declines.

ASX up 0.2%

Australia's benchmark S&P ASX 200 index managed to end higher after a choppy session. Earlier in the day, the index hit a new one-month low for a second day. The index entered positive territory after the Reserve Bank of Australia said low interest rates were having a desired effect on the economy in minutes from its latest meeting.

But sentiment remained shaky after ratings agency Standard & Poor's that the country's prized AAA credit rating could be reviewed unless substantial cuts were made to the budget.

Treasury Wine Estates surged 18 percent after it rejected a takeover offer from American global investment firm KKR at $4.70 a share, saying the bid was too low.

Read MoreGold bar and coin demand slumps to 4-year low

Kospi down 0.2%

South Korean shares retreated from Monday's fresh 2014 high after data released before the market open showed that producer prices fell for the 19th straight month in April.

Among blue-chips, Hyundai Motor and Kia Motors declined more than 1 percent each.

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