Asia stocks split after China data; Shanghai drops

HONG KONG (MarketWatch) � Asian stock markets ended on a mixed note following a choppy trading session Wednesday as data on Chinese manufacturing activity led to expectations Beijing may not immediately ease its monetary policy.

China�s Shanghai Composite Index CN:000001 �fell 1.1% to 2,268.08, Australia�s S&P/ASX 200 index AU:XJO �lost 0.9% to 4,225.70 and Hong Kong�s Hang Seng Index HK:HSI �dropped 0.3% to 20,333.37.

Meanwhile, South Korea�s Kospi KR:SEU �ended up 0.2% to 1,959.24, Japan�s Nikkei Stock Average JP:100000018 closed 0.1% higher at 8,809.79, and Taiwan�s Taiex gained 0.4% to 7,549.21.

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On Wednesday morning, a Chinese government-sponsored manufacturing survey put the January Purchasing Managers� Index at 50.5 in January, up from 50.3 in December and beating expectations for a drop to 49.5.

However, a separate, private-sector survey by HSBC put the January PMI at 48.8, also up a little from December�s 48.7 reading, but below the 50 level that separates expansion and contraction. Read full story on China PMI data.

Conita Hung, head of equity markets at Delta Asian Financial Group, said that while China will eventually loosen policy by reducing banks� reserve requirement ratio, the PMI data was unlikely to be the trigger.

�I would say the Chinese government will monitor bank lending and market conditions... [they may] wait for another two weeks and then take decide whether to cut the RRR,� Hung said. �If the Chinese government doesn't cut the RRR, then the markets may be volatile.�

Markets in Asia usually closely track China�s manufacturing PMI � considered to be a leading indicator of the economy there � as China is a major trading partner with several countries in the region and is an outsized force behind global demand for commodities.

Other HSBC PMI surveys released during the day showed a continued contraction in manufacturing activity in South Korea and Taiwan, although the reading for India jumped to 57.5 in January, from 54.2 in December.

Data released by South Korea also showed the nation�s exports fell for the first time in two years in January, strengthening expectations by an interest rate cut by the Bank of Korea. See report on Korean trade data.

The mixed performance for Asian stocks followed a mostly lower close for U.S. stocks Tuesday, with some weak earnings reports and economic data from the region weighing on Wall Street sentiment. Read more on U.S. stocks.

Major movers

Commodity- and property-related stocks were broadly lower in Shanghai, where Jiangxi Copper Co. JIXAY CN:600362 �dropped 3.8%, Aluminum Corp. of China Ltd. CN:601600 ACH �shed 3.4% and property major Gemdale Corp. CN:600383 �lost 1.3%.

In Hong Kong, some local property stocks declined after the special administrative region�s Financial Secretary John Tsang proposed in his annual budget address that the government increase the supply of land.

Shares of Cheung Kong Holdings Ltd. HK:1 CHEUY gave up 0.9%, and Sino Land Co. HK:83 �SNLAY �fell 3.6%.

In Tokyo, shares of Daiwa Securities Group Inc. JP:8601 DSECF dropped 1.8%, and Shinsei Bank Ltd. JP:8303 SKLKF fell 2.3%, after each reported relatively weak financial results late Tuesday.

But gains in banking shares supported the broader Japanese market, with Sumitomo Mitsui Trust Holdings Inc. JP:8309 CMTDF rising 3.4% and Mitsubishi UFJ Financial Group Inc. JP:8306 MBFJF �advancing 2.9%.

Australia also saw some earnings-related selling, with Energy Resources of Australia Ltd. AU:ERA �EGRAF �slumping 13.6% after the uranium miner swung to a fiscal-year net loss. Aquarius Platinum Ltd. AU:AQP AQPBF �plunged 12.5% after reporting a 4% drop in quarterly production.

Fairfax Media Ltd. AU:FXJ FFXLF �managed to buck the lower trend in Australia, jumping 10.1% after reports emerged late Tuesday that billionaire investor Gina Rinehart is seeking to buy another stake in the firm. See report on possible Fairfax Media stake buy.

In Seoul, LG Electronics Inc. LGEIY �rose 1.9%, reversing early declines, after reporting a narrowing of its loss in 2011 from the year before. Read more on LG earnings.