ASIA MARKETS: Japan, Australia Stocks Slip Before Fed Meet

By V. Phani Kumar, MarketWatch

HONG KONG (MarketWatch) -- Stocks in Japan and Hong Kong ended with small losses after a choppy trading session Tuesday, as investors pondered whether the U.S. Federal Reserve will maintain its monthly bond purchases.

Mainland Chinese and South Korean shares rose after also charting a volatile course that saw them change direction multiple times.

Japan's Nikkei Stock Average and Australia's S&P/ASX 200 each slipped 0.2%, while Hong Kong's Hang Seng Index ended fractionally lower.

On the upside, China's Shanghai Composite rose 0.1%, Taiwan's Taiex gained 0.2% and South Korea's Kospi added 0.9%.

The performance in Asia was mixed despite a triple-digit point gain for the Dow Jones Industrial Average (DJI) overnight.

Trading in the U.S. and other global markets has been volatile, as investors remain focused on the Federal Open Market Committee policy decision Wednesday, which investors are hoping will provide clues on how long the Fed will maintain its $85-billion-a-month in bond purchases.

"We expect this nervousness to continue to dominate until the FOMC rate decision and Chairman [Ben] Bernanke's press conference on Wednesday, with asset prices remaining vulnerable to news headlines, keeping the volatility elevated," Barclays analysts wrote to clients.

In Japan, broad losses in banks and telecommunication shares weighed on the market after two days of gains for the benchmark Nikkei Average. the broader Topix index ended the day 0.2% higher.

Shares of Mitsubishi UFJ Financial Group Inc. (MTU) fell 0.5%, Sumitomo Mitsui Financial Group Inc. (SMFJY) declined 0.6% and KDDI Corp. (9433.TO) lost 1.3%.

Even so, the market found support as some real-estate, insurance and brokerage stocks climbed alongside a few major exporters in the wake of the higher finish on Wall Street.

Mitsubishi Estate Co. (MITEY) rose 2%, Nomura Holdings Inc. (NMR) climbed 2.1% and MS&AD Insurance Group Holdings Inc. added 2.6%, finding buyers after steep losses suffered earlier in the month.

Shares of Sony Corp. (SNE) jumped 4.4% after a hedge-fund run by billionaire Daniel Loeb, which has called on the company to spin off its entertainment business, increased its stake in the firm.

Toyota Motor Corp. (TM) added 1.8% on reports the auto giant has raised its Japan sales target.

Sharp Corp. (SHCAY) gained 1.2% after the Asahi Shimbun reported the company was considering producing photocopiers for Samsung Electronics Co. (SSNLF), with a fresh investment from Samsung potentially a part of the deal.

Shares of market heavyweight Samsung rose 1.5% in Seoul, aiding gains for the Kospi.

Property stocks fell in Hong Kong but advanced on mainland Chinese bourses after official data showed home prices rose in a vast majority of the Chinese cities surveyed in May. According to Dow Jones Newswires calculations, the average home price increased 0.86% from the level in April, and was 5.32% higher than in May 2012.

China Overseas Land & Investment Ltd. (CAOVY) fell 1.7%, and China Resources Land Ltd. (CRBJF) dropped 1.2% in Hong Kong. However, Gemdale Corp. gained 2.6% in Shanghai, and the yuan-denominated A-shares of China Vanke Co. added 1.1% in Shenzhen.

"The fact that the monthly data doesn't show significant rises should mean that we are unlikely to get new [property-sector] curbs in the short term. But it also means that we are not likely to get any [policy] easing," said Andrew Sullivan, director of sales trading at Kim Eng Securities. He said the price trends represented a slightly negative data point for the sector.

Shares of major Chinese banks rose on mainland bourses following news that state-owned investment agency Central Huijin Investment Co. has increased its stakes in the four largest state-owned lenders.

The Shanghai-listed Industrial & Commercial Bank of China Ltd. (IDCBY) added 1% and China Construction Bank Corp. (CICHY) climbed 0.4%.

In Sydney, banks and retailers ended mostly lower, even as minutes from the Reserve Bank of Australia's last meeting showed the central bank was ready to cut interest rates further, if need be.

National Australia Bank Ltd. (NABZY) dropped 1.5%, while Woolworths Ltd. (WOLWF) declined 1%.

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