CANBERA (Alliance News) - Asian stocks erased early gains to end mostly lower on Monday, as mounting political tensions between Hong Kong and the mainland and fears that the entire state of Iraq could soon fall into the hands of militants overshadowed signs of stabilization in the world's second-largest economy.
Chinese shares eased slightly as increasing concerns over tight liquidity overshadowed the positive sentiment generated by upbeat economic data. The benchmark Shanghai Composite Index slid 0.11% to 2,024.37. China's manufacturing activity returned to growth for the first time this year, helped by the government's targeted approach to shore up growth, a preliminary survey showed. The HSBC/Markit Flash Manufacturing Purchasing Managers' Index (PMI) rose to 50.8, a seven-month high, compared with expectations for a reading of 49.7.
Hong Kong'sHang Seng Index tumbled 1.68% to 22,804.81, its biggest single-day loss in more than three months, on concerns that falling property prices in most cities and tighter liquidity in the banking system will weigh on economic growth. Meanwhile, tensions have soared in Hong Kong after a state-run Chinese newspaper slammed Hong Kong's unofficial referendum on democratic reform as an "illegal farce".
Japanese shares hit a five-month high as signs that China's economy is stabilizing added to investor optimism over the Federal Reserve's dovish stance on interest rates. The benchmark Nikkei average edged up 0.13% to 15,369.28, its highest level since January 29. The broader Topix Index, meanwhile, eased 0.1% to finish at 1,267.48.
Camera maker Olympus jumped nearly 5% after Goldman Sachs Group Inc. reiterated its buy rating on the stock. Mitsubishi Heavy Industries rose 1.3% after the French government chose General Electric Co.'s bid for the energy units of Alstom. TDK Corp. ended on a flat note as the company unveiled plans to cut costs by about 25 billion yen in fiscal 2014.
In economic news, an index monitoring the manufacturing sector in Japan came in with a score of 51.1 in May, up from 49.9 in April registering growth for the first time in three months, the latest survey from Markit Economics revealed.
Australian shares rose, with mining stocks outperforming as iron ore prices gained ground amid expectations of better demand growth outlook from China. The benchmark S&P/ASX 200 Index gained 0.6% to finish at 5,453.3. BHP Billiton rose 1.2%, Rio Tinto added 2.6% and smaller rival Fortescue Metals Group rallied 4% as copper futures advanced for the sixth straight day. In the banking sector, ANZ edged up marginally, while Commonwealth, NAB and Westpac rose about half a percent each.
Metcash climbed 2.9% despite the grocery wholesaler reporting an 18% decline in full- year profit. Ten Network Holdings gained 2% on reports a number of private equity firms are considering a possible bid for the embattled broadcaster. ResMed shares dropped 1.6% after the company said its CEO Michael J. Farrell had sold 3,200 shares of the company through open market route in a transaction on June 16th.
South Korea's Kospi average rose 0.35% to 1,974.92 on bargain hunting after tumbling 1.2% on Friday, its biggest single-day loss since April 25. Market heavyweight Samsung Electronics rose 1.6% after recent steep losses on concerns about its quarterly earnings outlook.
New Zealand shares declined as investors took some profits off the table to invest in the new IPOs coming to the market in the coming weeks. The benchmark NZX-50 Index dropped 0.37% to a month low of 5,126. Gold miner OceanaGold slumped 9.3%, cloud-based accounting software firm Xero plunged 7.3% to an eight-month low and biotech firm Pacific Edge tumbled 4.7%.
Retailers closed mixed, with Warehouse Group losing a percent after downgrading its full-year profit guidance, while Kathmandu Holdings rallied 4.4%. Credit card spending in New Zealand rose at a faster rate in May, figures from the Reserve Bank of New Zealand showed. Total billing rose a seasonally adjusted 7.5% year-over-year in May, up from the 3.2% increase in April. On a monthly basis, credit card spending rose 3%, reversing the 3% drop in April.
Elsewhere, the key benchmark indexes in Indonesia, Malaysia and Singapore were marginally lower, while India's Sensex was down 0.4% and the Taiwan Weighted average dropped half a percent.
Singapore's consumer price inflation rose at a faster-than-expected pace in May due to higher certificate of entitlement prices on cars, official figures showed. The consumer price index rose 2.7% from a year earlier, faster than April's 2.5% increase.
On Wall Street, the major averages rose about 0.2% each on Friday, with the Dow and the S&P 500 both reaching fresh record closing highs, as investors continued to digest the Federal Reserve's supportive policy announcement earlier in the week.