Asia stocks were down Tuesday in thin end-of-year trading, following a subdued lead from the US as investors took profits.

Wall Street on Monday had its worst day in nearly a month, falling from record highs after the extended rally of recent days.

Hong Kong and Shanghai were both marginally lower in early Asian trade.

Taipei was also off and Sydney shed more than one percent.

Jakarta, Tokyo, Manila, Seoul and Bangkok were all closed for a public holiday.

"While market volumes are predictably light, investors continue to strike a year-end cautionary tone as December optimism is gradually giving way to 2020's uncertainty," Stephen Innes, chief Asia market strategist at AxiTrader, said in a note.

North Korean leader Kim Jong Un is set to give his New Year's speech on Wednesday, with all eyes on nuclear-armed Pyongyang's threat of a "new way" after its end-of-year deadline for sanctions relief from the US, analysts said.

China's Xi Jinping is also scheduled to give a New Year's address.

In China, the closely-watched Purchasing Managers' Index (PMI), a key gauge of activity in the country's factories, was at 50.2 in December, according to official data published Tuesday.

The reading -- slightly above the 50-point mark that separates growth and contraction -- beat a forecast of 50.1 by analysts surveyed by Bloomberg News, comes amid a thaw in the US-China trade spat.

Reports on Monday said the US and China would shortly sign a partial trade deal, with White House economic aide Peter Navarro telling Fox News the signing could occur "within a week or two."

"The P1 deal is still 'skinny' relative to a full trade de-escalation scenario," cautioned AxiTrader's Innes.

"Investors will then press to consider the P2 risks, after all how much more progress can be realistically expected ahead of the US elections next year?"

Asian Stock Market
Asian markets followed Wall Street, which on Monday had its worst day in nearly a month, falling from record highs Photo: AFP / Philip FONG

Oil markets were largely unchanged, despite reports Iran had seized a vessel suspected of smuggling fuel near the Strait of Hormuz -- a chokepoint for a third of world's seaborne oil.

Traders were also waiting for the release of US crude production data later Tuesday.

Hong Kong - Hang Seng: DOWN 0.48 percent at 28,184.43

Shanghai - Composite: DOWN 0.04 percent at 3,038.93

Pound/dollar: UP at $1.3127 from $1.3106

Euro/pound: DOWN at 85.356 pence from 85.47 pence

Euro/dollar: UP at $1.1204 from $1.1202

Dollar/yen: DOWN at 108.66 yen from 108.87 yen

Brent Crude: UP 0.4 percent at $68.44 per barrel

West Texas Intermediate: DOWN 0.1 percent at $61.63 per barrel

New York - Dow: DOWN 0.6 percent at 28,462.14 (close)

New York - Nasdaq: DOWN 0.7 percent at 8,945.99 (close)

New York - S&P 500: DOWN 0.6 percent at 3,221.29 (close)

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