Asia shares struggle as data shows going tough

(STOCK, AFTER, EXPECTED, INDEX, QUARTER, PERCENT)

By Charlotte Cooper
TOKYO (Reuters) - Asian stock markets struggled to gain ground on Wednesday as economic data showed the process of turnaround to recovery was likely to be a slow grind, and the dollar capitalized on that more cautious sentiment.
Oil held above $70 a barrel after industry inventory data showed a bigger-than-expected fall in crude stocks, which helped pare some of the previous day`s losses after data unsettled investors about a potential U.S. economic rebound.
In Japan, business confidence pulled back from a record low hit three months ago, but the improvement was smaller than market players had expected and still a negative reading.
That followed an unexpectedly steep slide in U.S. consumer confidence in June, which dented optimism on Wall Street about prospects for recovery and weighed on shares in Asia.
Australia`s benchmark index .AXJO got the new quarter off to a weak start, falling 2 percent as growth-sensitive stocks such as shopping mall owner Westfield Group (WDC.AX) lost ground.
The broader MSCI index of Asia-Pacific shares excluding Japan .MIAPJ0000PUS eased 0.4 percent, holding below June`s 2009 peak, while Tokyo`s Nikkei share average .N225 was flat, with Orix Corp (8591.T) and All Nippon Airways (9202.T) sliding on news of possible public share offerings. .T
Japanese construction machinery makers such as Komatsu (6301.T) edged higher on news that China`s official purchasing manager index (PMI) gained.
But analysts noted big Japanese firms in the Bank of Japan`s tankan survey planned to cut capital spending, a key driver of the economy, by 9.4 percent in the year to next March, more than the market expected.
"Basically, the tankan showed that things aren`t all that good in the near term but seemed encouraging for the longer term, making its overall impact neutral," said Kenichi Hirano, operating officer at Tachibana Securities.
"I`d have liked to see slightly better capital spending, but given the current situation it`s only natural that it should fall -- after all, with production down, the last thing manufacturers can do right now is spend."
In Seoul, shares rose 0.8 percent helped by a slower than expected fall in South Korean exports, while component-maker LG Innotek (011070.KS) rallied on the first day of trading after it completed a merger with LG Micron Ltd.
The U.S. Conference Board`s index of consumer attitudes fell in June to 49.3 from a downwardly revised 54.8 in May, deflating stocks on the last day of the quarter.
The Dow Jones industrial average .DJI slipped 0.97 percent, the Standard & Poor`s 500 Index .SPX dropped 0.85 percent and the Nasdaq .IXIC eased 0.49 percent.
Nevertheless, Wall Street still closed out its best quarter in a decade, with the S&P 500 jumping 15.2 percent in the three months to end-June, the blue-chip Dow advancing 11 percent and the Nasdaq climbing by more than a fifth. .N
JOBS DATA IN FOCUS  Continued...
Original article

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