Asian Equities Pare Latest Gains

Most of the indices end lower on concerns China may tighten monetary policy soon

Asian equities slipped as the fears over monetary tightening in China came to the fore to haunt the sentiments and made the early 2010 gains fizzle out. Negative cues from the US stock futures also played their role as most Asian equities dropped. Chinese shares lost heavily as the domestic central bank moved to tighten liquidity in the money markets, stocking fears interest rate increases could come sooner than expected.

Other regional markets also finished mostly lower after an uninspiring performance on Wall Street left investors unwilling to chase stocks higher after their recent gains.

Japan's Nikkei 225 Average fell 0.5% to 10681.66 after flirting with gains a few times during a choppy session. Hong Kong's Hang Seng Index shed 0.7%, Australia's S&P/ASX 200 lost 0.5%, South Korea's Kospi fell 1.3% and Taiwan's Taiex gave up 1.1%.

China's Shanghai Composite lost 1.9% to finish at 3192.78, extending losses after the People's Bank of China sold 60 billion yuan ($8.78 billion) worth of three-month bills at 1.3684%, increasing the yield on such bills for the first time since August, from 1.3280%. The Shenzhen Composite index also dropped 1.9%, to 1,179.99.

China's central bank said Wednesday it aimed to keep inflation in check in 2010 while maintaining its pro-growth monetary policy as the world's third-largest economy recovers from the financial crisis. In a statement outlining its tasks for this year, the People's Bank of China said it would adjust its policies "at appropriate times and by appropriate levels" based on economic and financial market changes in China and overseas. The central bank said it would seek to ensure "stable prices" and to "effectively manage inflation expectations" as well as keep the yuan exchange rate "basically stable", according to the statement posted on its website.

The Indian markets took a breather after strong gains in the past four trading sessions that sent the key benchmark indices to 22-month closing highs on Wednesday. The BSE 30-share Sensex was provisionally down 111.87 points or 0.63%.

US Stocks finished on opposite sides of the unchanged mark Wednesday, as traders largely shrugged off another mixed batch of economic data. The major averages saw another choppy outing, lingering near the fifteen-month highs posted at the end of Monday's strong rally.

On the economic front, the Federal Open Market Committee released the minutes for its December meeting, indicating some debate among members regarding inflation risk following the government's massive stimulus measures.

Meanwhile, private payroll processor ADP reported that private sector employment decreased by 84,000 in December, slightly better than the 90,000 decline expected by economists.

The Dow gained 1.66 points, or less than a tenth of a percent, to end at 10,573.68 and the S&P 500 rose by 0.62 points, or 0.1 percent, to close at 1,137.14, while the Nasdaq lost 7.62 points, or 0.3 percent, to finish at 2,301.09.

The US stock futures are down 33 points in screen trade. In the commodity market, benchmark crude for February delivery was down 69 cents to $82.49 a barrel in electronic trading