--Most markets struggle as investors remain on edge ahead of the ECB outcome
--China markets weaken, while earnings remain a key driver in Japan
--Euro ticks up against the dollar, but remains capped as ECB result awaited
Most Asian stock markets turned lower Thursday amid uncertainty about
whether the European Central Bank will take decisive steps to contain
the euro-zone debt crisis.
Buyers were sparse following Wednesday's decision by the U.S. Federal
Reserve not to deliver new stimulus measures, with investors now
firmly focussed on the ECB outcome due later in the global day.
"Hopes are inflated (for ECB action) and we will need to see a very
significant announcement to justify the risk rally we have seen in the
past week," said Sue Trinh, senior currency strategist at RBC Capital
Markets in Hong Kong. "The risk is that the market will be, as with
the FOMC, underwhelmed," she said.
Sydney-based Macquarie Private Wealth division director Martin Lakos
said there's still uncertainty on what precisely the ECB will do.
"We've heard all the talk from European officials, but the cynics are
waiting to see what real policy action transpires," he said.
With global manufacturing activity largely disappointing, including
weak outcomes in the U.S. and China Wednesday, most investors remained
reluctant to pour money into stocks and other riskier assets.
Markets in China were weak, with the Shanghai Composite off 0.5%,
while Hong Kong's Hang Seng Index dropped 0.7% after a five-session
winning streak.
It will take some time for the Shanghai market to "drag itself out of
the current bearish environment, especially when economic data, such
as Wednesday's (purchasing managers index), also pointed to a
deterioration in the (Chinese) economy," said Zheshang Securities
analyst Zhang Yanbing.
Real estate stocks were down in Shanghai, partly weighed by renewed
concern about fresh controls on the sector from Beijing amid
rebounding housing prices. China Vanke dropped 4.8% and Gemdale fell
7.2%.
In Japan, the Nikkei Stock Average was off its morning highs, and was
recently up 0.5%, with corporate earnings continuing to influence
trade.
Mitsui Fudosan added 1.8% after reporting encouraging fiscal
first-quarter results, while Tokyo Electric Power jumped 11.7% after
positive first-quarter earnings.
Some Japanese exporters got a lift from the greenback's gains
Wednesday following the Fed's remarks, with Toyota Motor rising 2.5%,
and Sony 3.3% higher.
Elsewhere, Australia's S&P/ASX 200 was up 0.3%, South Korea's Kospi
Composite turned lower, off 0.3%, and India's Sensex was down 0.2%.
The U.S. employment report on Friday is also a focus for markets, and
the stronger-than-expected private sector ADP jobs report Wednesday
underpinned some hopes for a better outcome.
Lingering concerns about the global growth outlook continued to peg
back some key exporters, with Samsung Electronics down 1.9% in Seoul.
In Sydney, resources stocks pulled higher after a recent selloff, with
BHP Billiton up 1.1% and Fortescue Metals gaining 4.8%.
The U.S. dollar was consolidating against the euro and other rivals
after rising Wednesday on the Fed's lowered outlook for U.S. growth
and the absence of fresh easing measures.
The focus remained on the ECB's decision later, and some analysts
expect the euro to come under fresh selling pressure if the central
bank disappoints. "Although markets have pared back their
overly-bullish expectations from the end of last week, a lack of
action by the ECB to reduce peripheral bond yields will disappoint and
lead to a sell off in risk assets," and the euro, said Mitul Kotecha,
strategist at Credit Agricole, in a note.
The single currency was at $1.2251 against the dollar, from $1.2225
late in New York Wednesday, and at Y96.13 against the yen, from
Y95.92. The dollar was at Y78.46, from Y78.44.
Nymex crude oil futures for September delivery were down four cents at
$88.87 per barrel, while spot gold traded 80 cents higher at $1600.90
per troy ounce.
-Write to Wei-Zhe Tan at wei-zhe.tan@dowjones.com
(Correction   An earlier version of this story misstated the day
the U.S. private sector ADP jobs report was released.)
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(END) Dow Jones Newswires
August 01, 2012 22:05 ET (02:05 GMT)
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