ASIA MARKETS: Australia, Korea Stocks Retreat; Japan Wavers

By V. Phani Kumar, MarketWatch

HONG KONG (MarketWatch) -- Australian and South Korean stocks retreated Monday, taking a pause after key U.S. indexes ended lower on Friday and as investors looked ahead to key monthly manufacturing indicators on China from HSBC.

"The big market-moving event for Monday is Chinese manufacturing data," said Rivkin Securities global analyst Tim Radford. "Amid rising concerns over credit issues in China, any downside surprises in economic data could not come at a poorer time."

Australia's S&P/ASX 200 fell 0.9% as the nation began a new financial year, while South Korea's Kospi dropped 0.5%.

An official gauge of Chinese manufacturing Purchasing Managers' Index for June slipped to 50.1 from 50.8 in May. A reading above 50 indicates an improvement in activity. The final result of a separate, privately compiled survey by HSBC and Markit was due later in the day. A preliminary reading of that survey, released last month, printed at 48.3.

The Dow Jones Industrial Average (DJI) and the S&P 500 Index (SPX) ended lower on Friday, as concerns about the Federal Reserve's bond purchases remained in focus.

Japanese shares wavered in choppy trade, meanwhile, as investors took profits in the real-estate and telecommunication sectors after sharp gains on Thursday and Friday.

The Nikkei Stock Average reversed early gains to drop 0.4%, after rising 3% or more in the previous two sessions, while the broader Topix advanced 0.3%.

The Bank of Japan's quarterly tankan survey, released just ahead of the markets open Monday, showed an improvement in sentiment at both large manufacturers and non-manufacturers, with the former showing positive sentiment for the first time since mid 2011.

In Tokyo trading, shares of Mitsui Fudosan Co. (8801.TO) dropped 0.4% and Mitsubishi Estate Co. (MITEY) fell 1.2%, while telecommunications firm KDDI Corp. (9433.TO) gave up 1.4%.

Some automobile and shipbuilding firms advanced as the U.S. dollar (USDJPY) had moved above the Yen99 handle since the previous session. Toyota Motor Corp. (TM) rose 0.7%, Nissan Motor Co. (NSANY) climbed 0.9%, and Mitsui Engineering & Shipbuilding Co. gained 4.1%.

In Sydney trade, banks were mostly lower on caution ahead of Tuesday's monetary-policy decision at the Reserve Bank of Australia. Shares of Westpac Banking Corp. (WBK) gave up 1.8%, and those of National Australia Bank Ltd. (NABZY) lost 1.6%.

In Seoul, meanwhile, losses came after data from HSBC showed South Korea's manufacturing Purchasing Managers' Index fell to 49.4 in June from 51.1 in May.

Shares of Hyundai Motor Co. (HYMTF) lost 1.1%, and steel maker Posco (PKX) gave up 1.7%.

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