Asian Shares Mixed as Worries Over Greece Weigh -- 2nd Update

By Chao Deng 

Stocks in Japan and Australia slipped Tuesday, with i nvestors worrying about a standoff between Greece and its creditors, but China shares gained after inflation there slipped to a five-year low.

The Nikkei Stock Average ended down 0.3% at 17,652.68 and Australia's S&P/ASX 200 fell 0.3% to 5800.6, tracking losses in the U.S. and Europe overnight.

"More volatility may be ahead due to philosophical differences over how to service Greek debt, but thus far, domestic stock buying by the Bank of Japan as well as pension and other funds is stabilizing the market, and holding steep selloffs to a minimum," said Daiwa Securities senior strategist Tsuyoshi Nomaguchi. "That is not likely to end any time soon."

Greece's government said Monday that it plans to cancel some of its debt-reduction and economic-reform measures that are key conditions for international aid, putting the country at greater risk of default and reviving fears it will exit the eurozone.

"Worries over Greece are less of a concern to Japan than the fallout on currency markets and overall 'risk-on/off' investor sentiment, but at least the issue over the debt situation is set to find some clarity," said Tatsunori Kawai, chief strategist at Kabu.com Securities, noting a coming European Union summit.

As of the close of trading at 0600 GMT in Japan, the dollar was changing hands at Yen118.48 against the Japanese yen, down from the prior day's Yen118.81 mark--a negative for exporters who generally earn higher profits from a stronger dollar.

In Shanghai, stocks ended up 1.5% at 3141.59, after Chinese data showed consumer inflation in January rose 0.8% from a year earlier, below expectations, and slowing from a 1.5% year-over-year rise in December. Low inflation is expected to give the central bank more leeway for policy easing, often a boon for stocks.

The Hang Seng Index was roughly flat, but Australian mining firms received a boost from the China data. BHP Billiton, the world's biggest miner, rose 0.5% to A$31.39, while Rio Tinto gained 0.7% to A$60.70. Australia's largest trading partner is China.

Australia's corporate-earnings reporting season kicks off in earnest this week, with popular yield plays such as Commonwealth Bank of Australia, blood products maker CSL and telecoms company Telstra (TLS.AU) due to unveil results.

Japan's second-largest auto maker, Nissan Motor Co. Ltd., added 3.8% after it raised its full-year profit forecast Monday, helped by a weak yen and strong U.S. sales. Nissan's sales in the U.S. pulled within 154,000 vehicles of Honda's in 2014, narrowing the gap to nearly half of what it was a year ago.

--Vera Sprothen and Bradford Frischkorn contributed to this article.

Write to Chao Deng at [e-mail]

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