Asian Markets Retreat, Chinese Hopes Limit Downside

Asian markets pulled back from six-month highs Wednesday but held up after the drop on Wall Street, with hopes for more Chinese stimulus spending helping offset reports of weak first-quarter growth.

With many equity markets up between 20 percent and 30 percent since early March, investors took the opportunity to cash in on gains.

Speculation has been rife in the past few days that China might announce a new package focused on boosting consumer spending on top of the $585 billion plan aimed at infrastructure spending.

This especially so after a report on the Shanghai Securities News website said that Chinese annual economic growth, due to be released on Thursday, was between 6.0 percent and 6.8 percent in the January-March quarter, what would be the lowest on quarterly recordsgoing back to 1992.

In currencies, the yen climbed across the board as market players cut back on carry trades -- using the low-yielding Japanese currency as a source of funds to buy higher-yielding currencies. The U.S. dollar was down against the yen, while the Australian dollar dropped nearly 1 percent against the yen after having reached a six-month high the previous day. Oil prices edged higher after losing more than 1 percent on Tuesday after data showed a large jump in U.S. crude stocks.

Japan's Nikkei 225 Average finished 1.1 percent as Canon and other exporters slipped after surprisingly poor U.S. retail sales data dampened hopes for an economic recovery and sent the yen higher. But defensive stocks such as pharmaceuticals gained, while Aeon and other retailers rose despite disappointing earnings results as investors reckoned most of the bad news for the sector was likely out for now.

South Korea's KOSPI fell 0.7 percent, weighed down by weak U.S. retail sales and grim domestic employment data, with financials including KB Financial Group leading losses.

Australian shares closed little changed with losses in the top banks, following weakness in their counterparts on Wall Street, offset by gains in global miners such as Rio Tinto.

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Hong Kong shares ended 0.6 percent higher as stocks across the board succumbed to profit-taking after a two-day surge, with sourcing giant Li & Fung tumbling on surprise drop in U.S. retail sales. Li & Fung, which supplies consumer products to retailers such as Wal-Mart, slumped 9.6 percent, partly erasing Tuesday's 16.9 percent rally on news woman's apparel retailer Talbot's was exploring the possibility of signing on the Chinese company as it main sourcing agent.

Singapore's Straits Times Index rose 0.5 percent. Shares of Sembcorp Marine, the world's No. 2 oil-rig builder, fell 4.5 percent on Wednesday after it said a large customer had been placed under provisional liquidation.

China's Shanghai Composite Index dipped 0.4 percent in heavy trade, with property and financial shares soft as caution prevailed ahead of first-quarter economic growth and inflation data due later in the week.