Most Asia markets end lower, with Australia shares jittery amid election uncertainty, on-hold RBA

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Most Asia markets stumbled on Tuesday, with shares in Australia falling amid an uncertain election outcome and an on-hold central bank. But mainland China shares rose as data showed services activity grew in June.

Australia's benchmark ASX 200 closed down 53.77 points, or 1.02 percent, at 5,228, dragged by the heavily-weighted financials sub-index, which fell 1.27 percent.

In Japan, the Nikkei 225 closed down 106.47 points, or 0.67 percent, at 15,669.33 on the back of a stronger yen. Across the Korean Strait, the Kospi slid 5.45 points, or 0.27 percent, to 1,989.85. In Hong Kong, the HSI was down 1.44 percent in afternoon trade.

Bucking the trend, Chinese mainland markets were higher, with the Shanghai composite closing up 18.50 points, or 0.62 percent, at 3,007.11, while the Shenzhen composite added 4.69 points, or 0.23 percent, to 2,006.37.

A private survey of small and medium companies in China showed activity in the services sector grew at a quicker pace in June. The Caixin services Purchasing Managers' Index (PMI) for June was at 52.7, compared with 51.2 in May, marking the fastest increase in 11 months. Levels above 50 indicate expansion.

Down under, major Australian banks were pressured, with shares of National Australia Bank closing down 1.56 percent. Analysts have previously told CNBC the ongoing political uncertainty in Australia was weighing on the future of the big banks.

The country faces an apparent political deadlock, after a federal election at the weekend failed to produce a clear winner. Incumbent Prime Minister Malcolm Turnbull said on Tuesday it would be a few more days before vote counting concludes, adding that he would work harder to regain the trust of citizens.

Continued political and economic uncertainty could see the country move closer to losing its vaunted triple-A credit rating.

The Reserve Bank of Australia (RBA) kept its monetary policy unchanged in a move that was widely expected. In its policy statement, the central bank cited low inflation and overall decent economic growth for keeping its key cash rate unchanged at 1.75 percent.

The Australian dollar had a muted reaction to the RBA decision, briefly touching a session high of $0.7543 before moving back to its pre-decision levels. As of 2:31 p.m. HK/SIN, the Aussie traded at $0.7505, after dropping to levels near $0.7438 on Monday amid the uncertainty around the election outcome.

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Investors were also wary of renewed Brexit concerns that saw European stocks finish lower on Monday.

In the U.K., the ramifications of the country's vote to quit the European Union (EU) continued to sink in.

Nigel Farage, leader of the U.K. Independence party and a key Brexit campaigner, announced he was standing down, saying his "political ambition" had been achieved with the Brexit vote.

His departure came after another key Brexit campaigner, Boris Johnson, ruled himself out of the running to become the U.K.'s next prime minister. Incumbent David Cameron, a remain campaigner, said after the Brexit referendum that he would step down by October.

Uncertainty over Britain's future following the Brexit vote weighed Markit's construction PMI for the U.K., which dropped to 46.0 in June from 51.2 in May, marking its lowest level in seven years, with output falling at its fastest pace since 2009, during the global financial crisis.

The International Monetary Fund chief, Christine Lagarde, told a French newspaper on Monday, meanwhile, that exiting the EU could cut Britain's gross domestic product by between 1.5 and 4.5 percentage points by 2019.

Additionally, ratings agency S&P Global Ratings said both the euro zone's and the U.K.'s economic growth would take a knock as a result of the vote, with the agency warning that the U.K. would barely escape a "full-fledged recession caused by Brexit."

The ongoing uncertainty in the U.K. sent the British pound lower, with Cable trading at $1.3229 as of 2:23 p.m. HK/SIN, compared with levels around $1.3284 on Monday afternoon Asia time. The currency remains above the 31-year low of $1.3122 it touched in the immediate aftermath of the referendum results, released June 24, showing the U.K. voted to exit the European Union.

In the wider currency market, the Japanese yen, considered a haven asset, strengthened against the dollar, trading at 101.95 on Tuesday, after the pair traded as high as 103.39 on Friday.

Japanese automakers finished mixed; shares of Toyota closed up 0.51 percent. Nissan shares were up 0.15 percent. Honda was down 1.11 percent, Mazda off 2.66 percent and Yamaha Motor down 0.86 percent. Mitsubishi Motors shares fell 4.05 percent, while Isuzu Motors was up 1.65 percent.

In a note, Deutsche Bank analysts said they have upgraded Nissan shares from hold to a buy rating, while maintaining Toyota's buy rating at lower price targets. Despite facing currency headwinds from a stronger yen, Toyota remains an industry leader and has attractive value, the analysts said.

On Nissan, the analysts said the sell-off post Brexit appeared to have created a buying opportunity for the stock. "Nissan earnings are not without their risks ... but even so on our figures the company is being valued lower than even its global financial crisis levels," the analysts said.

In a separate note, Credit Suisse downgraded Mitsubishi Motors from Neutral to Underperform. Analysts said they expect Mitsubishi Motors to "embark on the long and rocky road toward a return to normality by regaining customer confidence and stabilizing operations."

Earlier in April, the Japanese automaker admitted to falsifying fuel economy test data to make emissions levels look more favorable.

Credit Suisse also upgraded Isuzu Motors from Neutral to Outperform; analysts said they favor Isuzu due to "its strong position in key local markets such as Thailand and commercial vehicles in Japan."

The dollar was a touch lower against a basket of currencies, trading at 95.631, compared with its last close at 95.649 and at levels near 96.00 in the previous week.

Analysts at Singapore's DBS Bank said the decline in the greenback was due to "a sharp pullback in Fed hike expectations."

"Against a dovish Fed outlook, many Asia ex-Japan currencies recovered nicely after the initial shock from the Brexit results," the DBS analysts said. "That said, there are some signs that the dollar index may be finding a bottom .. [as] most U.S. data releases after Brexit continued to surprise on the upside."

Oil prices were lower, with global benchmark Brent down 0.88 percent at $49.66 a barrel, while U.S. crude futures were off by 1.45 percent at $48.28 on Tuesday afternoon Asia time.

Gold, considered a haven asset, was off 0.54 percent at $1,343.05 an ounce.

Other haven assets saw demand waver. The yield on the 10-year Japanese government bond was at negative 0.248 percent as of 2:36 p.m. HK/SIN, after rising to a session high of negative 0.233 percent. The yield was as low as negative 0.264 on Monday.

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