Lackluster Session for Asia, Fed in Focus

Asian markets were lackluster on Tuesday following a flat finish in the U.S. stock market. But Greater China shares remained firm on the back of positive corporate earnings. Most investors were sidelined and cautious ahead of the Federal Reserve's two-day meeting.

The Fed is expected to deliver a small interest rate cut on Wednesday, though the central bank could signal that this is the last in a cycle as officials eye inflation warily.

Hong Kong shares touched a three-month high as the Hang Seng Index rose 1 percent to 25,914 points.

Bank of China's H-shares propelled the market, climbing 1.3 percent to a four-month high after the country's second-biggest lender said first-quarter earnings skyrocketed 85 percent, thanks to strong fee income and a lower tax rate.

Robust earnings from Baoshan Iron and Steel also buoyed the broader Chinese market. The company's first-quarter profit rose 16 percent thanks to rising steel prices.

PetroChina's also advanced despite the company posting a 32 percent drop in first-quarter earnings that fell short of expectations. Analysts said the poor results had already been factored in. The stock was up 0.9 percent.

This led the Shanghai Composite Index to rise 1.4 percent at 3,523 points.

South Korean stocks closed in negative territory with the KOSPI down 11 points or 0.6 percent at 1,811 points.

But LG Telecom shares jumped as much as 4 percent as it was the only mobile phone operator in South Korea to post a rise in first-quarter earnings. The country's third-largest carrier said net profit rose 15% to 76.1 billion won ($76.4 million), while operating profits jumped 30% to 89.9 billion won ($90 million). The stock ended 0.2 percent higher.

Australian shares clawed back into positive territory at the close. The benchmark S&P/ASX 200 index gained 4.2 points at 5,606.9.

Apollo Minerals propped the market higher as its shares soared 25% on news that Chinese Iron and Steel Group is set to increase its stake in the firm to 19.9 percent from the current 12 percent. Apollo shares closed at A$0.33.

But a selloff in Aristocrat Leisure weighed on Sydney after the game machine maker issued a downbeat outlook, saying underlying growth would be "well below" targets. Its shares plunged as much as 8 percent but closed 2.8 percent lower at A$7.81.

Takeover target Midwest Corp was suspended from trading today pending an announcement. Midwest recently rejected a hostile bid by China's Sinosteel to buy the shares it does not already own in the Australian iron ore prospector.

Singapore's Straits Times Index lost 0.9 percent to close at 3,173. Hong Leong Asia fell on news Malaysian cement mixer Tasek would buy its building-materials business for $237 million. Tasek jumped 8.3 percent on Tuesday. But this was not enough to boost the broader market. The KL Composite Index slipped 0.9 percent.

The Taiwan Weighted Index closed 2.1 percent lower to fall below the 9,000 mark at 8,892 points as earnings jitters spooked investors. After the market closed top contract chipmaker Taiwan Semiconductor posted a 49% jump in first-quarter earnings.

Japanese markets were closed for a one-day national holiday.

© 2008 CNBC.com