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Asia shares mixed as investors eye UK PM Theresa May's Brexit speech

Qilai Shen | Bloomberg | Getty Images

Markets in Asia finished mixed on Tuesday, as investors remained cautious ahead of British Prime Minister Theresa May's speech on Brexit plans due later in the global day, as well as President-elect Donald Trump's inauguration stateside at the end of the week.

In her speech, May is expected to outline plans for the United Kingdom's to exit the European Union.

On Monday, the British pound fell to three-month lows, following local media reports that suggested May will announce a "clean" and "hard" Brexit. The plan, reports say, would pull the country out from the European market and the European customs union, in exchange for the ability to control immigration laws and leave the jurisdiction of the European Court of Justice.

"The PM is expected to walk a fine line between providing enough information on the government's intentions, without necessarily showing too much of Britain's negotiating hand ahead of official discussions with the EU," said Rodrigo Catril, a currency strategist at the National Australia Bank, in a note.

The pound strengthened against the dollar in the afternoon session during Asian hours, with the pound trading at $1.2115, up from an earlier low of $1.2014. The euro lost ground against the pound, with the pair trading at 0.8792, down from an earlier high of 0.8822.

Japan's Nikkei Stock Average closed down 281.71 points, or 1.48 percent, at 18,813.53, after see-sawing between gains and losses throughout the session. The Topix index slipped 21.54 points, or 1.41 percent, to 1,509.10.

The yen gained ground against the dollar, strengthening to as high as 113.32, up from levels above 116 in the previous week on safe haven demand. At 2:21 p.m. HK/SIN, the dollar/yen pair traded at 113.46.

"The yen was driven on the back of risk aversion as outsized movement on pound/yen was the primary driver," explained Stephen Innes, a senior trader at OANDA, in a note. "There has been less focus on the dollar/yen pair after last week's hefty position clear out."

The pound/yen cross fell from levels above 140 in the previous week to about 137.46 on Tuesday during Asian hours.

The currency's relative strength kept major Japanese exporters under pressure. Shares of automakers Toyota closed down 1.58 percent, Nissan declined 1.04 percent and Honda was off by 2.67 percent, while electronics maker Sharp fell 2.68 percent.

Symbol
Name
Price
 
Change
%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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Across the Korean Strait, the Kospi bucked the downward regional trend to climb 7.70 points, or 0.37 percent, to 2,071.87.

Samsung Group shares appeared mostly steady, with Samsung Electronics up 0.8 percent, Samsung SDI up 0.4 percent and Samsung C&T down 2 percent. Samsung Engineering, on the other hand, declined 4 percent.

Seoul's central district court is said to hold a hearing on Wednesday morning local time to decide whether it will approve an arrest warrant for the head of Samsung Group, Jay Y. Lee, after South Korea's special prosecutors' office accused him of paying millions of dollars in bribe to a friend of President Park Geun-hye, according to Reuters.

Australia's benchmark ASX 200 closed down 49.04 points, or 0.85 percent, at 5,699.40 in afternoon trade, with most sectors finishing lower.

The financial sector was off 0.97 percent, with major banks selling off. Shares of ANZ fell 1.27 percent, Commonwealth Bank of Australia off by 0.88 percent, Westpac down by 0.88 percent and the National Australia Bank off by 1.06 percent.

Chinese mainland markets closed higher, with the Shanghai composite gaining 5.33 points, or 0.17 percent, to 3,108.76 and the Shenzhen composite up 21.61 points, or 1.16 percent, at 1,873.02. Hong Kong's Hang Seng index advanced 0.63 percent in afternoon trade.

In the broader currency market, the dollar pulled back against a basket of currencies to trade at 101.04, compared to its last close at 101.18. The Australian dollar fetched $0.7519, climbing from levels below $0.7350 last week.

In company news, Australian miner Rio Tinto released its fourth quarter and full year 2016 production results and provided guidance for 2017.

Iron ore shipments from Pilbara came in at 327.6 million tonnes for 2016, which was in line with guidance, and about 3 percent higher than 2015 numbers. For 2017, Rio Tinto expects Pilbara shipments to be between 330 and 340 million tonnes.

Meanwhile, mined copper production in 2016 climbed 4 percent on-year, but came in below expectations.

Shares of Rio Tinto fell 0.82 percent, erasing earlier gains of more than 1.2 percent. Other major resources producers also fell,with BHP Billiton down 0.22 percent and Fortescue down 3.31 percent.

In the U.S., markets were closed Monday for a public holiday. But analysts said Donald Trump's recent comments have done little to ease market concerns, particularly over the future of Sino-U.S. relations.

"While (his) comment that he wouldn't name China as a currency manipulator on "day one" was seen as a positive, he also said that his adherence to the One China policy depends on progress by China on trade issue," said Catril, pointing out given Beijing's sensitivity to trade issues, the comments have "not been seen as conducive to ease tension between the two countries."

Chinese President Xi Jinping is due to speak at Davos later on Tuesday with the remarks to be watched for any comments on recent tensions on trade and geopolitics.

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