Asian shares mostly down on US outlook

HONG KONG—Asian shares mostly edged down Thursday as traders cashed in after a two-day regional rally while sentiment was also dampened by the Federal Reserve’s decision to cut its 2011 US growth forecast.

Preliminary data from China suggesting manufacturing slowed further in June added to concerns of an easing in the global economy.

The US central bank on Wednesday said the world’s number one economy was recovering slower than expected and announced it would hold interest rates at super-low levels “for an extended period.”

However, it also confirmed its second round of bond-buying, known as quantitative easing 2 (QE2), will end this month as the current problems in the economy were temporary and would not need more stimulus.

Tokyo lost 0.34 percent, or 32.69 points, to end at 9,596.74, and Seoul closed 0.39 percent, or 8.04 points, lower at 2,055.86.

Hong Kong slipped 0.46 percent, or 100.83 points, to 21,759.14 while Sydney fell 0.71 percent, or 32.1 points, to 4,500.5.

But Shanghai rose 1.47 percent, or 38.93 points, to 2,688.25 despite HSBC reporting that its preliminary purchasing managers index (PMI) had hit an 11-month low.

Shanghai has seen heavy selling recently on expectations Beijing will soon hike interest rates further in a bid to cool red-hot economic growth.

The losses follow two days of gains in Asia that were helped by hopes for a solution to Greece’s debt crisis.

After a two-day meeting the Fed’s policy setting panel said on Wednesday that the “economic recovery is continuing at a moderate pace, though somewhat more slowly than the committee expected.”

It blamed the slowdown in part on “factors that are likely to be temporary,” such as higher food and energy prices, which were crimping consumer purchasing power, and supply chain disruptions related to Japan’s March earthquake and tsunami.

The committee slashed its growth estimate for the economy this year to a range between 2.7 percent and 2.9 percent, from its earlier forecast of 3.1-3.3 percent.

Fed chairman Ben Bernanke said the key reasons for maintaining the loose monetary policy were “the ongoing labor market slack” and “the subdued inflation outlook.”

He said the bank had additional “untested” tools available to ease monetary policy further if conditions worsened but warned that “none of them are without risks or costs.”

“The major concern for markets remains the depth and length of the current ‘soft patch,’” Credit Agricole said in a note to clients.

“The Fed believes it will be temporary and we concur but clearly the slide in equity markets over recent weeks suggests that there has been a divergence between stock market expectations and reality.”

Confirmation that QE2 will end this month provided a lift to the dollar, which firmed to 80.40 yen in afternoon Tokyo trade from 80.31 late Wednesday in New York. The euro eased to $1.4310 from $1.4349 and was sitting at 115.34 yen from 115.26.

In China, HSBC’s early PMI results came in at 50.1 in June, down from 51.6 in May, amid worries that the economy is headed for a hard landing following several interest rate hikes aimed at fighting inflation.

Hong Kong-based Brian Jackson, an economist at RBC, said the data were a relatively positive sign that inflation pressures in China may start to ease.

“I think the focus for policymakers is still on upside risks to inflation, rather than downside risks for growth,” he told Dow Jones Newswires.

HSBC chief economist Qu Hongbin said in a statement: “Demand is cooling thanks to the effect of tightening measures and the slackness in external markets.

“But hard-landing worries are unwarranted not least because the current PMI is at a level consistent with around 13 percent growth in industrial production.”

On oil markets New York’s main contract, West Texas Intermediate (WTI) for delivery in August, was down $1.27 to $94.14 a barrel in the afternoon.

Brent North Sea crude for August tumbled $1.21 to $113.

Gold closed in Hong Kong at $1,544-$1,545 an ounce, slightly up from Wednesday’s close of $1,546-$1,547.

In other markets:

— Taipei fell 0.62 percent, or 53.76 points, to 8,567.28.

Formosa International Hotels Corp. rose 1.85 percent to Tw$550.0 and Taiwan Semiconductor Manufacturing Co was 1.07 percent lower at Tw$74.2.

— Manila edged down 0.20 percent, or 4.14 points, to 4,241.14.

Atlas Mining rose 5.4 percent to 20 pesos and Philex Mining was up 6.5 percent at 21.30 pesos while Energy Development dipped 0.3 percent to 6.54 pesos and San Miguel Corp. dropped 0.6 percent to 114 pesos.

— Wellington rose 0.13 percent, or 4.3 points, to 3,461.80.

The index ended a five-day losing streak as Fletcher Building rose in response to a government offer to buy 5,000 earthquake-damaged homes in Christchurch.

Fletcher rose 1.1 percent to NZ$8.65, while Telecom rose 2.9 percent to NZ$2.48.

— Jakarta rose 1.82 points, or 0.05 percent, to 3,823.65.

Car distributor Astra International rose 1.3 percent to 60,800 rupiah, while Bank Danamon gained 1.7 percent to 6,000 rupiah.

— Singapore closed up 1.89 points, or 0.06 percent, to 3,044.72.

Singapore Airlines fell 0.43 percent to Sg$13.92 and Oversea-Chinese Banking Corp. fell 0.55 percent to Sg$9.12.

— Kuala Lumpur ended down 0.27 percent, or 4.16 points, to close at 1,563.19.

Finance firm RHB Capital shed 5.9 percent to 9.03 ringgit, top bank Malayan Banking lost 0.2 percent to 8.82 and banking group CIMB Group dipped 0.5 percent to 8.51.

Gaming company Genting added 0.9 percent to 11.30 ringgit while Malaysia Airlines rose 0.7 percent to 1.45.

— Bangkok fell 0.95 percent or 9.73 points to 1,014.13.

Banpu lost 8 baht to 708, whle PTT Plc fell 1 baht to 329.

— Mumbai rose 1.01 percent, or 176.86 points, to 17,727.49.

India’s largest private firm Reliance Industries rose 2.9 percent or 24.55 rupees to 870.65 while telecom major Reliance Communications rose 3.36 percent or 2.95 rupees to 90.65.