Asian shares eased on Tuesday as investors squared positions in thin volume before U.S. markets reopen after a long weekend and investors see fresh data that could offer clues about prospects for the world's largest economy.
MSCI's broadest index of Asia Pacific shares outside Japan slipped 0.3%. It is down 17% for the year, far less than the 50% plunge it had in 2008 when the collapse of Lehman Brothers roiled global financial markets.
Japan's Nikkei stock average closed down 0.5% in light trading. The Tokyo benchmark is down 17% this year.
Markets in Hong Kong, Australia and U.K. remained closed on Tuesday.
Other European markets were likely to open slightly up, with financial spreadbetters expecting both Frankfurt's DAX and Paris' CAC-40 to begin 0.3% higher.
"With U.S. and European players in holiday mood, there is no incentive except for year-end position adjustments," said Hirokazu Yuihama, senior strategist at Daiwa Capital Markets.
"The markets are in a lull now due to holidays, but concerns about the euro zone debt will resurface early next year, with the focus on refinancing needs facing Italy and Spain, and whether sovereign yields of these countries would shoot above levels considered unsustainable," he said.
Bank of Japan minutes for its Nov. 15-16 meeting, released on Tuesday, showed that BOJ board members were worried that unstable global financial markets were affecting Japan's markets to some extent.
The euro inched up 0.1% to $1.3074, staying well above its 11-month trough of $1.2945 hit earlier this month.
At this level, the single currency was set for a quarterly loss of about 2%, compared with its 7.7% decline in the third quarter when the euro came under heavy selling as fears of Greek default intensified.
Deteriorating confidence in the European financial sector forced European banks to reduce assets in order to bolster their fragile capital, weighing on Asian equities markets given their huge exposure to the Asian region.
With its 17% drop in 2011, MSCI's pan-Asian index has underperformed the pan-European FTSEurofirst 300 index of top shares, which is down 12%.
HOPES FOR THE U.S.
On Monday, when more markets were closed, Japanese and Indian stocks outperformed the rest of Asia in thin trade, with sentiment partly lifted by signs of U.S. economic recovery.
U.S. holiday season sales were expected to rise 3.8% to a record $469.1 billion, the National Retail Federation said, slower than last year's growth but stronger than its preseason forecast.
The potential brisk sales could reinforce emerging views that the U.S. economy is strengthening fundamentally, and follows recent data showing improvement the labout market. The number of Americans filing new claims for jobless benefits hit a 3-1/2-year low in the week shortly before Christmas while consumer sentiment reached a six-month high in December.
Investors will be looking for more positive signs when reports are released about the S&P Case-Shiller house price index for October and consumer confidence for December .
Sentiment has been underpinned by solid performances in U.S. equities, and strong data could help global markets end the year with a positive tone.
The broad Standard & Poor's 500 Index on Friday broke through its 200-day moving average after a four-day rally lifted stocks to bring the index into positive territory. The Dow Jones industrial average rose to its highest in five months, leaving it up 6% for the year.
Aside from the Dow Jones industrial average, U.S. crude oil futures and gold were among top performers, with year-to-date rises of about 9% and 12%, respectively.
The yen, with a yearly rise of 4%, has outperformed the dollar index which was up 1% as measured against a basket of six major currencies.
Aside from the euro and the Nikkei, underperformers included industrial metals such as a 22% decline in copper and a 19% drop for platinum so far this year.
