Asian shares struggled on Tuesday as investors remained cautious after Chinese trade data showed the world's second largest economy may be able to achieve a soft landing but demand may be slackening as imports growth slowed sharply.

European equity markets will likely resume post-Easter holiday trade with a fall, due to lingering growth concerns given the sharp slowdown in U.S. job creation. Financial spreadbetters predicted major European markets <.FTSE> <.FCHI> <.GDAXI> would open down as much as 1.7 percent. <.EU> <.L>

MSCI's broadest index of Asia Pacific shares outside Japan <.MIAPJ0000PUS> fell 0.5 percent, dragged lower by declines in Australian shares <.AXJO> which were hit by renewed worries about a stalling economic recovery and by Chinese shares.

Hong Kong shares <.HSI> and Shanghai shares <.SSEC> briefly trimmed some of earlier losses after data showed China returned to an export-led trade surplus in March, raising the prospect the global economy may be passing its low point in the current cycle to lift overseas orders just in time to compensate for a slowdown in Chinese domestic demand.

But Chinese shares deepened losses as imports grew 5.3 percent from a year ago, far below a 9 percent increase forecast, which also pushed copper and oil lower on worries about demand outlook for the leading importer of raw materials.

The Australian dollar briefly reached a session high of $1.0357 after the data, before retreating to $1.0302.

Dongming Xie, an economist at OCBC Bank in Singapore, kept a cautious view on China's export outlook for two reasons: First, global economic outlook remains uncertain. Second, Chinese exporters are facing rising trade protectionism from developed economies.

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China imports and exports: http://link.reuters.com/ked55s

China CPI and PPI data: http://link.reuters.com/tek57s

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SOME BREATHING SPACE

The yen inched up against the dollar after the Bank of Japan held monetary policy steady.

Japan's Nikkei average <.N225> was nearly flat, giving up the day's gains made on a steadying yen, which gave exporter shares some breathing space and helped lift the index. South Korean shares <.KS11>, which were higher earlier on a technical rebound, also retreated as other Asian peers eased. <.T>

China's trade figures followed an annual inflation rate in March which exceeded expectations but didn't change views Beijing would remain flexible about easing monetary policy to support growth. The country will report first-quarter gross domestic product growth on Friday.

China's economy likely grew at its slowest pace in nearly three years between January and March at just 8.3 percent, still well above the government's full-year growth target of 7.5 percent and pointing to a soft economic landing.

In a speech that did not touch directly on the outlook for economic growth or monetary policy, Federal Reserve Chairman Ben Bernanke said on Monday the U.S. economy has yet to fully recover from the effects of the financial crisis, and regulators must continue to find new ways to strengthen the banking system.

London copper fell 0.8 percent to $8,271 a tonne, while Brent crude futures eased 0.3 percent to $122.27 a barrel. U.S. oil inched down 0.2 percent to $102.31.

Analysts expect trading to be choppy this week with data and U.S. earnings dictating market direction.

U.S. earnings will come to the fore this week, with bellwethers Google Inc and JPMorgan Chase & Co scheduled to report results. Alcoa will be the first component of the Dow Jones industrial average <.DJI> to report results, after Tuesday's closing bell.

RISK GAUGE VOLATILE

U.S. bank executives face great expectations from investors when they report first-quarter results beginning Friday.

A key gauge of how investors perceive risk, the VIX index <.VIX>, rose to a one-month high on Monday to end at 18.81, reflecting growing risk aversion. The VIX, which measures expected volatility in the Standard & Poor's 500 index <.SPX> over the next 30 days, is up about 21 percent in April.

We are looking forward to see if trade data or Q1 GDP growth numbers for China will confirm our soft-landing scenario. The environment is likely choppier for global stocks that will have to assimilate a disappointing U.S. earnings season, Barclays Capital analysts said in a research note.

EPFR Global-tracked Equity Funds posted collective outflows of $2 billion for the week ending April 4, as the latest Fed minutes dashed hopes for another round of quantitative easing and surging Spanish bond yields refuelled fears about the euro zone debt crisis.

Asian credit markets eased, pushing the spread on the iTraxx Asia ex-Japan investment-grade index 4 basis points wider.

(Editing by Richard Borsuk; Editing by Michael Perry)