Most Asian stocks drop in choppy trade before Fed

HONG KONG (MarketWatch) — Most Asian markets retreated Tuesday in choppy trade as investors pondered whether the U.S. Federal Reserve will maintain its monthly bond purchases, with Hong Kong stocks dragged lower by a drop in mainland Chinese property and banking shares.

Australia’s S&P/ASX 200 AU:XJO -0.59%  fell 0.9%, the Shanghai Composite CN:SHCOMP -0.08%  dropped 0.3%, Hong Kong’s Hang Seng Index HK:HSI -0.68%  shed 0.7%, and Taiwan’s Taiex XX:Y9999 +0.22%  slipped 0.1%.

Japan’s Nikkei Stock Average JP:NIK -0.49% fell 0.7%, but South Korea’s Kospi KR:SEU +0.58%  was up 0.2%, with both changing direction multiple times during the session.

The broad losses in Asia came despite a triple-digit point gain for the Dow Jones Industrial Average DJIA +0.73%  overnight.

Trading in the U.S. and other global markets has been volatile, as investors remain focused on the Federal Open Market Committee policy decision Wednesday, which investors are hoping will provide clues on how long the Fed will maintain its $85-billion-a-month in bond purchases.

“We expect this nervousness to continue to dominate until the FOMC rate decision and Chairman [Ben] Bernanke’s press conference on Wednesday, with asset prices remaining vulnerable to news headlines, keeping the volatility elevated,” Barclays analysts wrote to clients.

Property stocks fell sharply in Hong Kong but rose on mainland Chinese bourses after official data showed home prices rose in a vast majority of the Chinese cities surveyed in May. According to Dow Jones Newswires calculations, the average home price rose 0.86% from the level in April, and was 5.32% higher than in May 2012.

Shares of China Overseas Land & Investment Ltd. HK:688 -2.13% CAOVY +1.65%  fell 1.9%, and China Resources Land Ltd. HK:1109 -3.69%   CRBJF -5.19%  dropped 3% in Hong Kong. However, Gemdale Corp. CN:600383 +1.05%  gained 1.5% in Shanghai, and the yuan-denominated A-shares of China Vanke Co. added 0.5% in Shenzhen.

“The fact that the monthly data doesn’t show significant rises should mean that we are unlikely to get new [property-sector] curbs in the short term. But it also means that we are not likely to get any [policy] easing,” said Andrew Sullivan, director of sales trading at Kim Eng Securities. He said the price trends represented a slightly negative data point for the sector.

Shares of major Chinese banks rose on mainland bourses following news that state-owned investment agency Central Huijin Investment Co. has increased its stakes in the four largest state-owned lenders.

In Shanghai, shares of Agricultural Bank of China Ltd., or ABC CN:601288 +0.38% ACGBY +4.12% , added 0.8% and China Construction Bank Corp. CN:601939 +0.43%   CICHY +3.38%  climbed 0.7%.

However, the banks’ Hong Kong-listed shares dropped to return some recent gains, with CCB HK:939 -1.43%  shedding 1.3%, and ABC HK:1288 -0.29%  slipping 0.3%.

In Japan, some real-estate, insurance and brokerage stocks climbed alongside a few major exporters in the wake of the higher finish on Wall Street, although some banks and telecommunication stocks fell.

Mitsubishi Estate Co. JP:8802 +1.41%   MITEY -1.97%  rose 1.2%, Nomura Holdings Inc. JP:8604 +2.05%   NMR +3.36%  climbed 2.3% and MS&AD Insurance Group Holdings Inc. JP:8725 +2.78%  added 1%, finding buyers after suffering steep losses earlier in the month.

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Shares of Toyota Motor Corp. JP:7203 +1.40%   TM +2.56%  added 0.7% on reports the auto giant has raised its Japan sales target, while steel maker JFE Holdings Inc. JP:5411 +0.94% JFEEF -5.91%  advanced 2.2% on news it plans to invest $300 million to build an automotive steel sheet plan in Indonesia.

Shares of Sharp Corp. JP:6753 +0.47%   SHCAY +1.14%  gained 0.5% after the Asahi Shimbun reported the company was considering producing photocopiers for Samsung Electronics Co. SSNLF -0.36% KR:005930 +0.66% , with a fresh investment from Samsung potentially part of the deal. Samsung shares rose 0.3% in Seoul.

On the downside, shares of Mitsubishi UFJ Financial Group Inc. JP:8306 -0.52% MTU +2.86%  fell 1%, and KDDI Corp. JP:9433 -1.48% KDDIY +2.76%  lost 1.8%.