Asian shares capped, U.S. fiscal cliff weighs
Asian shares were capped on Monday as investor sentiment was weighed down by concerns over U.S. fiscal woes as well as Greece's bailout, despite improving economic data from the world's two largest economies, the United States and China.
MSCI's broadest index of Asia-Pacific shares outside Japan <.MIAPJ0000PUS> was down 0.1 percent after ending last week down 0.7 percent at one-week low.
Australian shares fell 0.3 percent while South Korean shares <.KS11> opened down 0.3 percent.
Japan's Nikkei stock average <.N225> opened down 0.6 percent to a four-week low.
Government data on Monday showed Japan's economy shrank 0.9 percent in July-September from the previous quarter, as forecast. It was the first contraction in three quarters, suggesting faltering global demand and weak consumer spending may push the economy into a mild recession.
The dollar eased 0.1 percent against the yen to 79.42, near a three-week low of 79.07 yen hit on Friday.
The euro was up 0.1 percent to $1.2719, off a two-month low against the dollar of $1.2690 on Friday.
"The stock market will be range bound today as uncertainty persists over the U.S. fiscal cliff following presidential elections, and financial aid to Greece has not been decided," Oh Hyun-seok, an analyst at Samsung Securities, said of Seoul shares.
Negotiations began to avoid the "fiscal cliff" by finding a compromise to cut the U.S. deficit before nearly $600 billion worth of spending cuts and tax increases kick in early 2013. Markets are also eyeing the debt ceiling, which needs to be raised to avoid a government shutdown.
President Barack Obama on Friday invited congressional leaders to the White House, saying he was "open to compromise". House Speaker John Boehner, a Republican, reiterated his opposition to any tax hikes on the wealthy, while Obama said there was no way around tax increases on the wealthiest Americans.
Analysts say the fiscal cliff could derail the U.S. economy, which had recently shown signs of a modest recovery.
U.S. stocks and oil rose on Friday, lifted by a sharp increase in September U.S. wholesale inventories and sales, as well as a rise in November consumer sentiment to its highest level in more than five years.
U.S. crude steadied around $86.07 a barrel on Monday. Brent fell 0.2 percent to $109.22.
Over the weekend, China's data showed trade surplus ballooned to its biggest in 45 months in October, as export growth rose to a five-month high above 11 percent, adding to other data that suggested a less urgent need for new economic stimulus measures.
China is also taking steps which may affect global capital flows. It plans to boost foreign investment in mainland stock and bond markets by raising quotas for the Renminbi Qualified Foreign Institutional Investor scheme, which permits qualified investors to channel offshore yuan funds into mainland markets.
It also eyes raising the quotas for the Qualified Foreign Institutional Investor scheme, the original, dollar-denominated program that allows institutional investors to buy stakes in Chinese-listed stocks or bonds.
For outside investment, the sovereign wealth fund China Investment Corporation said it will focus more of its $482 billion firepower on Asia.
In contrast to the U.S. and China, industrial output in France, Italy and Sweden fell while Germany warned that Europe's largest economy was expected to slow further.
Prospects for a bailout for debt-stricken Greece remained unclear even after Greece on Sunday won a parliamentary approval for the 2013 budget law, a crucial requirement for Athens to revive its stalled international aid and avoid insolvency.
Euro zone finance ministers were unlikely to release a new tranche of loans to Greece at their meeting on Monday given no agreement yet on how to make its debt sustainable. But Athens is set to get two more years to cut debt, officials said.
Trade data on Friday showed fears that U.S. superstorm Sandy could hit the U.S. economy prompted hedge funds and other big speculators in U.S. commodities to shed holdings in gold and a broad number of markets to a four-month low.
Data from EPFR Global showed on Friday that worries before the U.S. elections and ongoing worries about the global economic outlook encouraged investors to buy bond funds worldwide in the latest week.
(Additional reporting by Hyunjoo Jin in Seoul; Editing by Michael Perry)