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Asian Markets Turn Mixed as Caution Sets In

Asian markets lost steam on Tuesday to come off their early highs following solid gains on the U.S. market and confirmation that CIT Group had secured $3 billion in financing.

The Japanese market roared back to life in the afternoon session to hit a two-week closing high. The Nikkei 225, playing catch-up after a long weekend holiday, ended up 2.7 percent at 9652.02, higher while the broader Topix rose 2.7 percent to finish at 901.55. Investors turned their attention to politics as Prime Minister Taro Aso's dissolved parliament's lower houseon Tuesday for an election expected on Aug. 30.

Japanese exporters rose broadly on optimism for the U.S. economy, with Canon up 3.6 percent and Panasonic leaping 5.7 percent. Toyota Motorshares raced up 3.1 percent after saying it plans to overhaul its U.S. manufacturing strategy to account for idle capacity and a change in corporate priorities.

Seoul shares rose after gains overnight on Wall Street, with news of the CIT rescue and positive U.S. economic data continuing to fuel markets' upward momentum. The KOSPI was up 0.7 percent. Meanwhile, shares in chemicals makers fell after their recent rally, with LG Chem and Hanwha Chemical both slipping.

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Australian stocks retraced their earlier gains after hitting their highest levels since November, but gave way to profit-taking ahead of the country's earnings season. Resources stocks offered strong support, but minutes by the Reserve Bank of Australia suggesting interest rates could fall further, weighed on the broader market. The S&P/ASX 200 index closed up 0.01 percent at 4050.7 points, marking its sixth day of gains.

Greater China markets were mixed with Taiwan markets up for the sixth consecutive session led by tech plays but the Shanghai Composite suffered its biggest drop in five weeks to decline 1.6 percent. Metal and coal shares bore the brunt of the sell-off as the world's largest initial public offering by China State Construction Engineering took subscriptions today.

Hong Kong shares struggled to maintain its positive footing after hitting a 10-month high at one point in the session. The Hang Seng closed flat. Chinese insurers like China Life and Ping An extended gains after the industry regulator said mainland insurance companies may have doubled their earnings in the first half, but shares in China Mobile dropped as the operator added fewer new users in June amid competitive pressures.

Singapore's Straits Times was flat but Singapore Exchange gained after the bourse operator appointed a new chief executive, ending a six-month search for a new leader.

Malaysia's KLCI skidded 0.4 percent flat after briefly touching a new high this year.