Asian markets fell on Tuesday but the euro rose as attention turns to a European Central Bank policy meeting later in the week, with dealers hoping for plans to restart a bond-buying program.
With US markets closed for the Labor Day holiday on Monday and few catalysts, regional investors took a wait-and-see approach with the ECB meeting on Thursday as well as closely watched US jobs figures due on Friday.
Tokyo slipped 0.10 percent, or 8.38 points, to 8,775.51, Sydney fell 0.61 percent, or 26.2 points, to 4,303.5 and Seoul lost 0.29 percent, or 5.58 points to 1,907.13.
Hong Kong ended 0.66 percent lower, shedding 129.30 points to 19,429,91 and Shanghai fell 0.75 percent, or 15.50 points, to 2,043.65.
The losses come after a broad regional rally on Monday following downbeat manufacturing figures that raised hopes for a fresh round of stimulus measures and monetary easing.
Expectations rose that the ECB would announce a new round of sovereign bond purchases after European lawmakers said the bank’s head, Mario Draghi, had indicated such a move.
With struggling economies such as Spain, Italy and Portugal desperate for help to push down their borrowing costs Draghi said any central bank intervention would include only short and medium-term debt, the lawmakers said.
He said in a closed-door meeting that bond-buying in the past was justified to help stabilise and protect the 17-nation eurozone, they added.
“The only question is whether or not it (the ECB) will print more money between now and November,” Nicholas Smith, equity strategist at CLSA in Tokyo, told Dow Jones Newswires.
Draghi’s comment helped push the euro to a two-month high of $1.2627 Tuesday at one point in Asia, compared with $1.2598 late Monday in London trade. However, it later eased to $1.2609.
It also fetched 98.97 yen, compared with 98.68 yen a day earlier. The dollar was at 78.43 yen against 78.32 yen.
And on bond markets in early European trade the borrowing costs for Spain and Italy eased back slightly in anticipation of a debt-purchasing plan.
Investors brushed off Moody’s decision to lower the European Union’s long-term issuer rating outlook from stable to negative.
They also looked past news that Spain’s indebted Andalusia region, the country’s most populous that has a 33.9 percent unemployment rate, would seek a one-billion-euro “advance” from Madrid to provide liquidity.
There was also little reaction to data that showed eurozone manufacturing activity contracted for a seventh straight month in August.
A purchasing managers index survey of thousands of eurozone manufacturers compiled by research firm Markit came in at 45.1 in August. While it is up from 44.0 in July it still shows the sector is deep in contraction.
Any score below 50 indicates shrinkage.
Asian markets mostly rose on Monday on stimulus hopes after figures showed manufacturing in giants China and India continued to weaken.
Also in traders’ sights was the release of jobs figures out of the United States as they look for clues on the state of the world’s biggest economy with its recovery stuttering.
Another weak result would stoke expectations for another round of bond-purchasing by the Federal Reserve, or quantitative easing.
Oil prices rose, with New York’s main contract, light sweet crude for delivery in October, advancing 53 cents to $97.00 a barrel in the late afternoon and Brent North Sea crude for October delivery gaining 12 cents to $115.90.
Gold was at $1,694.20 at 0800 GMT compared with $1,688.65 on Monday.
In other markets:
— Taipei closed flat, edging up just 0.82 points to 7,451.35.
Taiwan Semiconductor Manufacturing Co was 0.12 percent higher at Tw$84.0 while leading smartphone maker HTC lost 2.10 percent to Tw$256.0.
— Manila closed 0.83 percent, or 43.21 points, down at 5,175.87.
Philippine Long Distance Telephone led the retreat, dropping 1.09 percent to 2,730 pesos, while Ayala Land fell 1.97 percent to 22.45 pesos.
— Wellington gained 0.19 percent, or 6.99 points, to 3,676.02.
Contact Energy rose 1.0 percent to NZ$4.95 and Fletcher Building slipped 1.2 percent to NZ$6.52.
