Asian stocks fell broadly on Tuesday on concerns over China's economic outlook after a preliminary report showed Chinese manufacturing activity expanded less than economists estimated in April. The flash HSBC Purchasing Managers' Index for the month fell to a two-month low of 50.5 from a final reading of 51.6 in March, suggesting the world's second-largest economy still faces considerable headwinds into the second quarter.
China's Shanghai Composite index tumbled 2.6 percent, with banks falling sharply on growth worries. Recent reports about improper trading practices at several brokerage firms also hurt investor sentiment. Hong Kong's Hang Seng index, meanwhile, fell 1.1 percent.
Tokyo stocks edged lower, as a firmer yen weighed on exporters and weak Chinese manufacturing data added to global growth worries. The Nikkei average slipped 0.3 percent, while the broader Topix index shed 0.2 percent. Realty firms, tire makers and miners led the decliners, while insurers and builders gained ground. Honda Motor lost a percent, while Mitsubishi Estate and Mitsui Fudosan retreated 3-4 percent. Bridgestone fell 2 percent, hurt by a Nikkei report that rival Toyo Tire & Rubber is raising its annual production capacity in the U.S.
Lender Mitsubishi UFJ Financial Group declined 1.5 percent following a UBS downgrade to "sell" from "neutral." Mizuho Financial Group shed 1.8 percent and Sumitomo Mitsui Financial Group closed 0.8 percent lower. Yamada Denki tumbled 4.8 percent after the electronics retailer cut its full-year profit forecast. NEC Corp. soared 7.6 percent after the Nikkei newspaper reported Marubeni Corp. is preparing to buy a 51 percent stake in its unit NEC Mobiling. Steelmaker JFE Holdings rose half a percent after announcing its fiscal 2012 group earnings.
Australian shares rose sharply, led by banks and energy firms tracking positive cues from Wall Street. Disappointing Chinese manufacturing data capped the gains to some extent. Both the benchmark S&P/ASX 200 and the broader All Ordinaries index ended up about a percent each. ANZ climbed 2.4 percent, NAB rose 1.4 percent, Westpac advanced 1.3 percent and Commonwealth added a percent.
Woodside Petroleum soared 9.7 percent after the oil and gas producer announced a special dividend of 63 US cents a share, citing strong cash flows and anticipated reductions in the company's debt levels. Rival Oil Search gained 1.5 percent and Santos rallied 3 percent. The Chinese data weighed on miners, dragging BHP Billiton and Rio Tinto down 1-2 percent. Shares of Virgin Australia Holdings soared 4.6 percent after the Australian Competition and Consumer Commission approved the company's decision to buy a 60 percent stake in Tiger Airways.
Seoul shares drifted lower on foreign selling because of a weaker Japanese yen and concerns about global growth prospects. The benchmark Kospi average ended 0.4 percent lower. Auto components maker Hyundai Mobis tumbled 2.9 percent after a weekend meeting of the G20 countries endorsed Japan's stimulus policies despite wariness from emerging countries.
New Zealand shares rose, led by Diligent Board Member Services after the company reported last week an 84 percent jump in first-quarter sales. Shares of Diligent soared 4.6 percent to a record closing high and heavyweights Fletcher Building and Telecom rose 3-4 percent, while the benchmark NZX-50 index gained 0.7 percent. Among the prominent decliners, Contact Energy, Infratil and Ryman Healthcare fell about a percent each.
Elsewhere, benchmark indexes in India, Indonesia, Malaysia, Singapore and Taiwan were down between 0.4 percent and 0.8 percent.
U.S. stocks gained ground overnight, reflecting strong gains in resource and technology stocks as commodities advanced and activist investor ValueAct Capital took a $2 billion stake in Microsoft. Also, traders reacted positively to earnings from big-name companies like Halliburton and Caterpillar. The Dow edged up 0.1 percent, while the S&P 500 rose half a percent and the tech-heavy Nasdaq added 0.9 percent.
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