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 global growth concerns lingered given the sharp slowdown in U.S. job creation.
MSCI's broadest index of Asia Pacific shares outside Japan <.MIAPJ0000PUS> eased 0.3 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>, however, trimmed some of earlier losses after data showed China logged trade surplus of $5.35 billion in March against a $1.30 billion deficit forecast, and exports grew 8.9 percent on the year, above expectations for a 7.2 percent rise.
Gains were limited, however, as the data also showed Chinese imports grew 5.3 percent from a year ago, far below a 9 percent increase forecast, suggesting demand may be weaker than previously thought.
The data still highlights the fact that China can continue to count on foreign demand to partly mitigate for weakening domestic demand, said Dariusz Kowalczyk, senior economist and strategist, Asia ex-Japan, at Credit Agricole CIB.
The Australian dollar briefly reached a session high of $1.0357 after the data, before retreating to $1.0338.
China CPI and PPI data: http://link.reuters.com/tek57s
SOME BREATHING SPACE
The yen inched up against the dollar after the Bank of Japan held monetary policy steady.
Japan's Nikkei average <.N225> gained 0.4 percent, as a steadying yen gave exporter shares some breathing space and helped lift the index, which fell to a one-month low on Monday, while shares in South Korea <.KS11> also rose in a technical rebound. <.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.
The Chinese data had limited impact on copper and oil, with London copper down 0.8 percent to $8,325 a tonne, while Brent crude futures holding steady above $122 a barrel. U.S. oil gained 0.1 percent to $102.59.
Analysts expect trading to be choppy this week with data and U.S. earnings giving direction for the coming months.
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 remain constructive about global risk but expect a choppy trading environment this week, Barclays Capital analysts said in a research note.
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 said.
Data from EPFR Global showed global equity markets struggled during the first week of April as the latest Federal Reserve minutes dashed hopes for another round of quantitative easing and surging Spanish bond yields refuelled fears about the euro zone debt crisis. EPFR Global-tracked Equity Funds posted collective outflows of $2 billion for the week ending April 4.
(Editing by Richard Borsuk)