Asian Markets Weak Ahead of ECB Policy Meet

Asian markets remained mostly weak in the morning as traders remain cautious ahead of the European Central Bank meeting. The Japanese currency also paused its plunge against its peers ahead of the Chinese festival season.

In Tokyo, the Nikkei average traded 0.75 percent or 85.86 points lower to 11377.89 while South Korea's KOSPI was up moderately, by 0.03 percent or 0.55 points to 1936.74. Australia's S&P/ASX 200 added 0.32 percent or 15.90 points to 4936.90.

China's Shanghai Composite Index fell 0.37 percent or 9.12 points to2425.36. Hong Kong's Hang Seng index slipped 0.18 percent or 42.22 points to 23214.71.

Wall Street had ended earlier with modest gains after some improved quarterly earnings reports boosted investors' confidence. Corporate performance contributed to traders sentiments in Asia as well, along with the yen's movement in the currency markets.

The Japanese currency paused its downward momentum against the dollar and the euro after having plunged to a near three year low on fiscal stimulus optimism. The greenback eased about 0.21 percent to trade at 93.44 yen while the single currency slipped around 0.32 percent to be quoted at 126.22 yen. Traders and analysts remain speculative on the yen's direction as the Japanese government continues to remain supportive of aggressive monetary stimulus measures, but some suggest that things may not be as positive as hoped.

"The yen has already fallen to within touching distance of our mid-year forecast of 95 to the dollar, while the surge in the Nikkei has left it only a little short of our target of 11,600," said Julian Jessop, chief global economist at Capital Economics.

"However, even though the narrative behind these related trends appears to be compelling and the momentum strong, there are several good reasons to expect some renewed yen strength (and Nikkei weakness) soon".

The European Central Bank is set to meet later in the day for its policy review and analysts suggest that it could retain the key interest rates at 0.75 percent. But traders remain cautious for any comments on the euro's recent strength against the dollar. The single currency had peaked to $1.3711, its highest level since November 2011, but eased to $1.3505 early in the day.

Growing optimism that the eurozone economy may be well on track to recovery had boosted sentiments, but concerns persist on the Spanish political scandal and the upcoming Italian elections.

Chinese traders remained subdued ahead of the Chinese New Year season next week, when stock markets would remain closed for the whole week.

Major Movers

Electronics stocks traded lower in Tokyo. Nikon plunged 18.23 percent after the firm slashed its profit estimates on weak European demand. Ricoh was down 3.32 percent while Konica Minolta holdings fell 3.86 percent.

In Australia, the National Bank of Australia gained 1.85 percent after improved quarterly earnings report. Rupert Murdoch's News Corp was down 2.98 percent after slashing its financial-year outlook, despite better quarterly performance.

Resource stocks fell in Hong Kong. Aluminum Corp of China dropped 3.86 percent while China Shenhua Energy and China Coal Energy dipped 2.21 and 1.90 percent respectively.