Asian Stocks End Mixed, Japan Sinks 1%

Asian markets finished mixed Tuesday as investors fretted over the health of the U.S. economy. Japan closed almost 1 percent lower, but South Korea and China made gains of almost 1 percent.

Investors turned cautious on the back of data showing growth in U.S. factory activity slipped in November to the lowest since January and after Fed policy makers gave a sober assessment of the world's biggest economy.

Investors turned cautious after data on Monday indicated a slowdown in U.S. factory activity growth and amid uncertainty surrounding emerging plans to shore up the U.S. mortgage market.

Financial stocks pared recent gains, with ANZ Banking Group and Mizuho Financial both down. But South Korean banks, which have lagged their regional peers, were firmer led by a 2 percent gain for top lender Kookmin Bank.

Machinery and shipping shares such as Kawasaki Kisen dragged Japanese stocks lower after growing concerns about the U.S. economy, with a stronger yen also contributing to the fall. Investors turned defensive as a bearish mood spread on concerns about profits next year and fears about a U.S. economic slowdown, with buying of firms such as Kao Corporation and railways picking up. The Nikkei 225 Average closed down 0.95 percent after falling by more than 1 percent at one point.

South Korea's KOSPI closed 0.8 percent higher led by technology companies such as Samsung Electronics on expectations for better earnings next year. Hyundai Motor also gained on data showing South Korea's top automaker reported the biggest sales increase last month in the United States.

Australian shares ended little changed, with a fall in base metals prices weighing on miners, while hopes of an imminent U.S. interest rate cut buoyed U.S.-exposed firms such as Westfield Group. Analysts said while the widely expected U.S. rate cut on Dec. 11 may provide a short-term boost, there was little impetus to drive the market higher going into year-end given nagging worries about the impact of the credit squeeze on the U.S. economy.

Hong Kong blue chips gained 0.8 percent on low volumes, as property shares rose further on rate-cut hopes, with Sun Hung Kai Properties striking a fresh record. China Resources Land surged on news that the mainland real estate developer bought property interests from its parent at a discount to their net asset value.

Singapore's Straits Times Index ended 0.2 percent higher as SingTel and DBS Group moved into positive territory.

Chinese shares rebounded on, led by banking and property stocks amid talk that after plunging 18 percent in November, the market might finally be establishing a bottom. The amount of money invested in A shares continued to expand rapidly last month, rising by 120 billion yuan ($16.2 billion) to 1.78 trillion yuan, the official Shanghai Securities News said.

© 2009 CNBC.com