Asian Markets Mixed After Disappointing China PMI

Asian markets traded mixed in the morning reversing early gains as disappointing China manufacturing figures sparked concerns on the economic health of the world's second largest economy.

Japan's benchmark Nikkei average gained 0.31 percent or 35.01 points to 11173.67 while South Korea's KOSPI fell 0.64 percent or 12.47 points to 1949.47. Australia's S&P/ASX 200 was up 0.84 percent or 40.90 points to 4919.70.

In China, the Shanghai Composite Index eased 0.02 percent or 0.56 points to 2384.86 while Hong Kong's Hang Seng was down 0.27 percent or 63.03 points to 23666.50.

Markets had started the day on a positive note as Wall Street closed recording one of the strongest first-month performances in years. But sentiments dampened after China's official Purchasing Managers Index (PMI) showed that manufacturing activities in the Communist nation expanded at a slower pace in January. The indices remained at 50.4, less than December's level of 50.6 and sharply below the analysts' estimated reading of 51.

Although the data has fueled further concerns on the stability of Chinese economic recovery, analysts point out that the weak data could have been caused by the changes in survey methodology.

"The data seem to suggest the recent economic pickup remains fragile," note analysts at ANZ.

"However, the change of sampling frame -that now covers 3,000 companies instead of 820 previously - could have contributed partly to the soft reading".

This was underscored by the HSBC' s China PMI figures which showed that the country's manufacturing sector hit a two-year high on the back of improving domestic demand. The index rose to 52.3 in January, the most since January 2011 and slightly over the preliminary reading of 51.9.

Investors are now awaiting the monthly US non-farm payroll data set for release later in the day. Economists expect the data to show an increase of 160,000 jobs and the unemployment rate to hold steady at 7.8 percent. The US and eurozone manufacturing figures are expected during the day.

Japanese macroeconomic figures once again disappointed. Official figures showed that the country's unemployment rate rose to 4.2 percent in December, above analysts' expectations of 4.1 percent jump while household spending dropped 0.7 percent year-on-year. But Japanese markets remained positive with the Nikkei looking set for another weekly advance on corporate earnings reports and yen plunged further against the dollar. The greenback traded at 91.79 yen.

Major Movers

Earnings related news supported stocks in Tokyo. Sharp Corp was up 2.89 percent after the Nikkei reported that improved smartphone earnings had boosted the company's performance in the final months of 2012, ahead of its earnings report release. NEC Corp jumped 7.62 percent after reporting strong results.

Resource firms traded lower in Hong Kong following the weak Chinese data. Aluminum Corp of China was down 1.60 percent while China Coal Energy slipped 1.50 percent. Citic Pacific fell 1.44 percent.

Aluminum Corp of China fell 1.35 percent in Shanghai as well while Jiangxi Copper slipped 0.15 percent and Baoshan Iron and Steel Company fell 0.20 percent each.